Core Insights - The article discusses the investment positions of various analysts and the recommendations made by The Motley Fool regarding Cadence Design Systems [1] Company Insights - The Motley Fool has positions in and recommends Cadence Design Systems, indicating a positive outlook on the company's stock performance [1]

PresentationUnknown Analyst Hi, everybody. My name is [ Natalia Winkler ]. I'm a semiconductor analyst here at UBS. I'm very excited to have Anirudh Devgan with us, CEO of Cadence Design Systems. Before we start, I want to read a quick forward-looking statements. Today's discussion will contain forward-looking statements, including Cadence's outlook on future business and operating results due to risks and uncertainties. Actual results may differ materially from those projections or implied in the discussio ...

Cadence Design Systems (NasdaqGS:CDNS) 2025 Conference December 02, 2025 04:15 PM ET Company ParticipantsAnirudh Devgan - CEOConference Call ParticipantsNatalie Winkler - Equity Research AnalystNatalie WinklerHi everybody, my name is Natalie Winkler. I'm a semiconductor analyst here at UBS. I'm very excited to have Anirudh Devgan with us, CEO of Cadence Design Systems. Before we start, I want to read a quick forward-looking statement.Anirudh DevganThese are big chairs, you know.Natalie WinklerToday's discus ...

Core Insights - Nvidia is at the forefront of the AI boom, with CEO Jensen Huang stating that "the age of AI is in full steam," highlighting the shift towards agentic AI in enterprise workflows [1] - Cadence Design Systems is positioned to benefit from the increasing demand for complex AI chips through its software and simulation engines that aid chipmakers in designing and optimizing processors for agentic AI [2][4] Company Overview - Cadence is a leader in electronic design automation, providing tools for semiconductor and tech companies to develop chips for various applications including AI, cloud computing, and automotive [4] - The company has deepened partnerships with Nvidia and is expanding its project pipeline, which positions it well for future growth in the AI sector [2] Market Performance - Cadence's stock has experienced volatility, initially impacted by concerns over China export curbs, but rebounded as restrictions eased, with design activity in China remaining strong [5] - The stock price peaked near $375 in mid-September, driven by the Nvidia-AI boom and China's recovery, although it saw a slight dip post-Q3 report as some gains appeared to be priced in [5] Valuation Metrics - Cadence's current valuation is high, with a P/E ratio of 48, significantly above the sector average of 24, indicating it may be overpriced relative to its peers [6]

Core Insights - Cadence Design Systems, Inc. (CDNS) is an electronic systems design company headquartered in San Jose, California, utilizing its Intelligent System Design strategy to convert complex ideas into working silicon through software, hardware, and semiconductor Intellectual Property (IP) [1] - The company holds a market capitalization of nearly $81.8 billion, positioning it in the "large-cap" category, with a diverse portfolio that includes Core EDA, Semiconductor IP, and System Design & Analysis tools [2] Stock Performance - Shares of Cadence Design have decreased by more than 19.1% from its 52-week high of $376.45 set in July, and the stock has slipped 12.9% over the past three months while the Nasdaq Composite gained 6.6% in the same period [3] - Over the past 52 weeks, CDNS stock has declined by 2.4%, with a year-to-date (YTD) gain of only 1.3%, contrasting sharply with the Nasdaq's 20% increase over the past year and 18.4% YTD [4] - Technical indicators show that CDNS stock is trading below its 50-day and 200-day moving averages, indicating a steady loss of upside momentum [5] Financial Performance - On October 27, CDNS reported fiscal 2025 Q3 results that exceeded Wall Street expectations, with revenue of $1.34 billion, reflecting a year-over-year increase of 10.1%, and adjusted EPS rising 17.7% annually to $1.93 [6] - The company has a Q3 backlog of $7 billion, supported by strong financial execution and a record pipeline with broad-based demand across its business [6] - Management has raised its full-year revenue outlook to approximately 14% annual growth, expecting full-year fiscal 2025 revenue in the range of $5.26 billion to $5.29 billion, with adjusted EPS projected between $7.02 and $7.08 [7]

Core Viewpoint - Citi Group has initiated coverage on two leading EDA giants, Synopsys (SNPS.US) and Cadence Design Systems (CDNS.US), with a "Buy" rating, predicting they will be key players in the upcoming AI investment wave [1][7] Group 1: Market Performance and Ratings - Both Synopsys and Cadence have underperformed in the past six months, with Synopsys down approximately 22% and Cadence down 5%, lagging behind the Philadelphia Semiconductor Index and the S&P 500 [2] - Citi has set a 12-month target price of $580 for Synopsys and $385 for Cadence, reflecting optimism about their recovery [7] - The EDA software market is dominated by Synopsys and Cadence, which together hold about 70% market share, with expected sustainable revenue growth of 15% to 20% [7][8] Group 2: AI and EDA Software Demand - The demand for EDA software is increasing due to the growing need for complex AI chip designs, driven by major tech companies like NVIDIA, AMD, and cloud giants [3][4] - EDA software is essential for chip design, and its role is becoming more critical as AI infrastructure demands exponential growth in computing power [3][4] - Both companies have integrated AI tools into their EDA software ecosystems, enhancing design efficiency and productivity [5][4] Group 3: Financial Resilience and Future Outlook - EDA software has shown strong fundamental resilience, consistently outperforming the semiconductor industry during downturns [8] - The share of EDA in overall chip industry R&D budgets is expected to rise from 13%-15% as AI tools enhance productivity [8] - Citi analysts favor Synopsys over Cadence due to its current valuation discount and potential for margin improvement [8]

Group 1 - The article does not provide any relevant content regarding company or industry insights [1]

Summary of Cadence Design Systems FY Conference Call Company Overview - **Company**: Cadence Design Systems (NasdaqGS:CDNS) - **Industry**: Engineering Software, specifically focused on Electronic Design Automation (EDA) and AI infrastructure Key Points and Arguments Company Positioning and Growth - Cadence is central to the AI infrastructure stack, providing engineering software that is essential for complex AI workloads, leading to exponential growth in demand for its services [3][4][6] - The company has experienced double-digit revenue growth over the past decade, with a recent upward revision of revenue growth guidance from 12% to 14% for the current year, driven by increased complexity in AI workloads [7][4] - Cadence's business model has evolved from being solely an EDA company to incorporating core EDA, IP business, and system design analysis, all of which are now sizable and interrelated [7][8] Record Backlog and Customer Demand - The company ended Q3 with a record backlog, indicating strong demand across all lines of business, particularly in AI and high-performance computing sectors [10][12] - Cadence is seeing significant design activity and new customer acquisition, especially in the automotive sector [12][10] Future Outlook and Visibility - Visibility for 2026 is considered strong, with expectations of continued demand for systems and hardware refresh cycles [18][19] - The company is cautious in its guidance, preferring to maintain a prudent approach to avoid inventory issues while ensuring steady growth [70][72] AI and EDA Market Dynamics - Most growth is expected to come from digital and remote sectors, with AI tools enhancing existing capabilities and driving additional revenue [23][47] - The complexity of designs is increasing, making EDA tools more essential for customers [46][47] Foundry Relationships - Cadence has strong partnerships with key foundries like TSMC, Samsung, and Intel, which are crucial for future customer engagements and design flows [41][42] - The foundry ecosystem is expanding, with Cadence increasingly engaged with companies like Samsung and Intel, which were previously less involved [41][42] Hardware Cycle and Production - The hardware refresh cycle is still in its early stages, with increasing demand for Cadence's products, particularly the Z2 and Z3 systems [55][61] - The company aims to maintain a backlog of orders with a lead time of 8 to 22 weeks, currently positioned in the middle of that range [63][65] Acquisition Strategy - Cadence announced the acquisition of Hexagon's Design and Engineering Business, which is expected to enhance its systems design analysis portfolio and provide new customer opportunities [87][88] - The integration process for acquisitions typically takes 12 to 15 months to realize revenue and cost synergies, with expectations of incremental margins improving over time [101][105] Design IP Focus - Cadence has shifted its stance on design IP, now recognizing its importance and potential for rational growth, particularly in advanced process nodes [167][180] - The company aims to build a robust IP portfolio aligned with market demands, focusing on advanced nodes and customer-driven development [180][206] Market Conditions in China - Demand in China has shown resilience post-restrictions, but the company anticipates a gradual decrease in the percentage of overall business from this region due to limited access to leading technology [260][266] - Growth in China is expected to be slightly below average compared to other regions over the next three to five years [275] Additional Important Insights - Cadence's approach to customer relationships is characterized by long-term partnerships rather than transactional engagements, which differentiates it from competitors like Synopsys [218][220] - The company emphasizes continuous improvement and learning from past acquisition experiences to enhance integration and profitability [136][140] This summary encapsulates the key insights from the Cadence Design Systems FY Conference Call, highlighting the company's strategic positioning, growth drivers, and market dynamics.

Market Overview - The PCB Design Software Market was valued at USD 4.32 Billion in 2025E and is projected to reach USD 12.11 Billion by 2033, growing at a CAGR of 13.77% from 2026 to 2033 [1][13]. U.S. Market Insights - The U.S. PCB Design Software Market size was USD 1.19 Billion in 2025E and is expected to grow to USD 3.26 Billion by 2033, with a CAGR of 13.47% during 2026-2033 [3]. - Key drivers include strong R&D capabilities, rapid integration of cloud-based tools and AI, and the demand for fast, small electronics [3]. Segmentation Analysis By Component - In 2025, the Software segment led the market with a share of 72.80%, while the Service segment is the fastest-growing with a CAGR of 13.60% [4]. By Technology - High-end Software dominated the market in 2025 with a share of 46.50%, and the Mainstream Software segment is the fastest-growing with a CAGR of 14.1% [5]. By Deployment - On-premises solutions led the market in 2025 with a share of 58.70%, while the Cloud segment is expected to grow the fastest with a CAGR of 15.4% [6][7]. By Application - Computer & Consumer Electronics held the largest share of 34.60% in 2025, and Automotive Components is the fastest-growing segment with a CAGR of 15.80% [8]. Regional Insights - North America dominated the PCB Design Software Market in 2025E with over 38.20% revenue share, driven by advanced electronic design automation tools and investments in multilayer PCB technologies [9]. - The Asia Pacific region is expected to have the fastest-growing CAGR of 14.92%, attributed to rapid growth in electronics manufacturing and automation in PCB design processes [10]. Key Companies - Major players in the PCB Design Software market include Cadence Design Systems, Siemens EDA (Mentor Graphics), Altium Limited, Autodesk, Inc., and others [14]. Recent Developments - In May 2025, Cadence launched the Millennium M2000 Nvidia-GPU supercomputer, enhancing GPU-accelerated simulation performance for PCB and chip-level verification workflows [18]. - Siemens introduced Xpedition Standard, emphasizing AI features and cloud connectivity for faster design cycles [18].

Core Insights - Cadence will participate in a fireside chat at the Wells Fargo TMT Summit on November 18, 2025, featuring John Wall, the senior vice president and CFO [2][3]. Company Overview - Cadence is a leader in AI and digital twins, focusing on computational software to enhance innovation in engineering design for silicon and systems [5]. - The company provides essential design solutions for semiconductor and systems companies across various markets, including hyperscale computing, mobile communications, automotive, aerospace, industrial, life sciences, and robotics [5]. - In 2024, Cadence was recognized by the Wall Street Journal as one of the world's top 100 best-managed companies [5]. - For the fiscal year 2024, Cadence reported revenues of $4.641 billion and a net income of $1.055 billion [8]. Event Details - The webcast of the fireside chat will be available live at 8:45 a.m. PST and will be archived for 180 days on the Cadence website [3][4].