The upcoming report from Cadence Design Systems (CDNS) is expected to reveal quarterly earnings of $1.82 per share, indicating an increase of 31.9% compared to the year-ago period. Analysts forecast revenues of $1.35 billion, representing an increase of 26.1% year over year.The current level reflects a downward revision of 0.6% in the consensus EPS estimate for the quarter over the past 30 days. This demonstrates how the analysts covering the stock have collectively reappraised their initial projections ove ...

Cadence Design Systems (CDNS) is expected to deliver a year-over-year increase in earnings on higher revenues when it reports results for the quarter ended December 2024. This widely-known consensus outlook gives a good sense of the company's earnings picture, but how the actual results compare to these estimates is a powerful factor that could impact its near-term stock price.The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released ...

Cadence Design Systems (CDNS) closed the latest trading day at $302.91, indicating a +0.09% change from the previous session's end. The stock fell short of the S&P 500, which registered a gain of 0.36% for the day. Meanwhile, the Dow lost 0.28%, and the Nasdaq, a tech-heavy index, added 0.51%.Coming into today, shares of the maker of hardware and software products for validating chip designs had lost 0.03% in the past month. In that same time, the Computer and Technology sector 0%, while the S&P 500 gained ...

Cadence Design Systems, Inc. CDNS is one of the standout tech stocks of the last 15 years, soaring 5,000% to blow away the Tech Sector’s 640% run. Yet, CDNS stock has been flat over the past 12 months, lagging Tech’s 25%.The recent stagnation allows investors to buy Cadence Design Systems 10% below its highs as it finds support at some key technical levels and looks ready to break out of the trading range it’s been stuck in.See the Zacks Earnings Calendar to stay ahead of market-making news.The modeling and ...

Core Viewpoint - The article discusses the reliability of brokerage recommendations, particularly focusing on Cadence Design Systems (CDNS), and highlights the importance of using these recommendations in conjunction with other analytical tools like Zacks Rank to make informed investment decisions [1][4]. Brokerage Recommendations for Cadence Design Systems - Cadence has an average brokerage recommendation (ABR) of 1.50, indicating a consensus between Strong Buy and Buy, based on recommendations from 18 brokerage firms [2]. - Out of the 18 recommendations, 14 are Strong Buy and 1 is Buy, which accounts for 77.8% and 5.6% of all recommendations respectively [2]. Limitations of Brokerage Recommendations - The article notes that relying solely on brokerage recommendations may not be wise, as studies indicate limited success in guiding investors towards stocks with the best price increase potential [4]. - Analysts from brokerage firms often exhibit a strong positive bias due to vested interests, issuing five "Strong Buy" recommendations for every "Strong Sell" [5][9]. Zacks Rank as an Alternative Indicator - Zacks Rank categorizes stocks into five groups based on earnings estimate revisions, which are strongly correlated with near-term stock price movements, making it a more reliable indicator than ABR [7][10]. - The Zacks Rank is updated more frequently than ABR, reflecting changes in earnings estimates promptly, thus providing timely insights into future price movements [11]. Current Earnings Estimates for Cadence - The Zacks Consensus Estimate for Cadence remains unchanged at $5.91 for the current year, suggesting steady analyst views on the company's earnings prospects [12]. - Due to the unchanged consensus estimate and other factors, Cadence holds a Zacks Rank of 3 (Hold), indicating a cautious approach despite the Buy-equivalent ABR [13].

Core Insights - Cadence Design Systems, Inc. (CDNS) has signed a definitive agreement to acquire Secure-IC, enhancing its capabilities in embedded security solutions for complex system-on-chips (SoCs) and silicon solutions across various industries [1][5] - The acquisition is expected to close in the first half of 2025, pending regulatory approvals, and will have an immaterial impact on Cadence's revenues and earnings in the short term [2] - Following the announcement, CDNS shares increased by 3.4%, closing at $321.49 on January 22 [2] Company Overview - Secure-IC, based in Rennes, France, is recognized for its embedded security IP platforms and serves major clients in industries such as automotive, data centers, mobile, aerospace, defense, Internet of Things, networking, and consumer electronics [3][4] - Cadence's existing portfolio includes silicon-proven IP such as interface IP, memory, AI/ML, and DSP solutions, which will benefit from Secure-IC's security offerings [4] Strategic Benefits - The acquisition is expected to unlock new growth opportunities and innovation for Cadence, particularly in developing next-generation SoCs and chiplet systems [5] - Cadence has a history of collaboration with Secure-IC, having recently worked together on a flagship chiplet project, showcasing their combined expertise [5] Acquisition Strategy - Cadence is actively pursuing acquisitions to expand its business pipeline and strengthen its position in the electronic design automation software and services market [6] - Recent acquisitions include BETA CAE Systems, Invecas, Intrinsix, Pointwise, and NUMECA, aimed at enhancing various aspects of its technology and service offerings [6]

Market Overview - The Nasdaq dropped 1.5% on Friday, sending it back under its 21-day moving average [5] - Long-term investors should focus on the 50-day and 200-day moving averages for the S&P 500, Nasdaq, and favorite stocks as key buying levels [6] - Stocks are expected to experience a recalibration in early 2025 following a massive two-year rally [16] - Corrections and pullbacks are regular events that investors can take advantage of [17] - The next stock market downturn should be bought up quickly given the outlook for earnings growth in 2025 and 2026 [19] Cadence Design Systems (CDNS) - Cadence is projected to grow its revenue by 13% in 2024 and 2025, adding over $1 billion to the top line between FY23 and FY25 [2] - The company's adjusted EPS is expected to grow by 15% and 16% in 2024 and 2025, respectively [2] - Cadence's modeling and computational software are essential for the lifecycle of semiconductors and other vital technologies [8] - Nvidia and other giants depend on Cadence's simulation technology for their cutting-edge semiconductors [10] - Cadence averaged 14% revenue growth over the trailing five years [10] - The company's 2025 and 2026 earnings estimates faded this year, leading to underperformance [10] - Cadence's stock has soared roughly 5,000% in the last 15 years, outperforming the Tech sector and Computer-Software industry [21] - CDNS underperformed the Tech sector and the market in 2024, setting up a potentially attractive entry point for investors in 2025 [22] - Cadence trades at a 25% discount to its highs in P/E terms while Tech is 5% below its peaks [23] - The growing complexity of semiconductors for AI and hyperscale computing has transformed Cadence into an invaluable partner for many chip companies [25] - Cadence was range-bound in 2024, trading 7% below its highs and around its February 2024 levels [26] Arista Networks (ANET) - Arista Networks is a client-to-cloud networking powerhouse, focusing on large AI, data center, campus, and routing environments [3] - The AI revolution is a significant driver for ANET's growth [3] - ANET's networking infrastructure has expanded rapidly over the past decade alongside cloud computing and the big data explosion [3] - Arista Networks trades near its all-time highs in terms of forward earnings, making it due for a recalibration [4] - Any slide down to ANET's 50-day or 200-day moving average would mark a buying opportunity [4] - Arista Networks boasts over 8,000 cloud customers worldwide, including some Magnificent 7 tech companies [11] - Microsoft and Meta are two of ANET's largest clients, with "cloud titans" accounting for 46% of its revenue [11] - Microsoft and Meta rely heavily on Arista Networks for their big data growth and AI dreams [12] - ANET grew its revenue from $361 million in 2013 to $5.86 billion last year, averaging 37% sales growth over the past three years [13] - Arista Networks is projected to boost its sales by 19% in FY24 and 17% in 2025 to reach $8.15 billion [13] - ANET's price per share became more attainable to many investors after a 4-for-1 stock split in early December [15] - Arista Networks has an impressive balance sheet, with $7.4 billion in cash and equivalents against $3.6 billion in total liabilities and zero debt [27] - ANET stock has skyrocketed roughly 2,800% in the past 10 years, outperforming Meta and Microsoft [27] - ANET's Tech-crushing performance includes a 92% run in 2024 [27] - Wall Street views ANET's growing relationship with Microsoft and Meta as a long-term vote of confidence [24] - 13 of the 19 brokerage recommendations for ANET are "Strong Buys" [24] - Arista Networks is projected to grow its adjusted earnings by 26% and 10% in FY24 and FY25, respectively, following 52% EPS expansion in FY23 [24] - ANET has topped quarterly estimates for five years in a row and holds a Zacks Rank 2 (Buy) [24]

Core Viewpoint - Cadence Design Systems (CDNS) stock has gained 10% year to date but has underperformed compared to its industry and the broader technology sector, which gained 22.5% and 35.3% respectively, while the S&P 500 grew by 27.9% [1] Price Performance - The significant underperformance of CDNS stock has raised concerns among investors about whether to maintain their positions or cut their losses [3] Challenges Facing CDNS - Global macroeconomic conditions and substantial exposure to the semiconductor sector are concerning, as any reduction in R&D spending in this sector could negatively impact CDNS [4] - Higher operating costs and intense competition in the EDA space from peers like Keysight Technologies, Synopsys, and ANSYS are additional challenges [5] - The company generates over 50% of its revenues from international markets, with 41.4% from the U.S. and 58.6% from international operations in 2023 [6][7] - The balance sheet is affected by acquisitions, with goodwill and intangible assets totaling $3.156 billion, representing 34.4% of total assets as of September 30, 2024 [7] - Increasing debt load is a concern, with cash and cash equivalents of $2.786 billion compared to long-term debt of $2.475 billion as of September 30, 2024 [8] Valuation and Estimates - CDNS stock is trading at a premium with a forward 12-month Price/Earnings ratio of 44.27X compared to the industry average of 33.95X, reflecting high expectations for future growth despite uncertain near-term prospects [9] - Analysts have revised earnings estimates downward for the current quarter and next quarter by 8.5% and 0.6% to $1.82 and $1.57 per share respectively, while the estimate for the current year has been revised upward by 0.5% to $5.91 per share [11][12] Growth Catalysts - The expanding product portfolio and frequent product launches are key growth catalysts, with strong demand for software, particularly in verification and digital design products [13][14] - The company is likely to benefit from increased R&D spending in AI-driven automation, focusing on embedding AI capabilities across its offerings [15] - Sales of the Cadence.AI portfolio nearly tripled year over year in the last reported quarter [16] New Product Developments - CDNS continues to invest in verification and digital design products, launching advanced systems like the Palladium Z3 Emulation and Protium X3 FPGA Prototyping systems, which offer significant performance improvements [18][19] Investment Considerations - Strong end-market demand trends and opportunities from the proliferation of AI applications are positives for CDNS, but external risks and falling estimates warrant caution in the near term [20] - Long-term prospects appear promising amid increasing design activity in the semiconductor space, suggesting that current stakeholders may consider holding their positions [21]

Core Insights - Cadence Design Systems, Inc. (CDNS) has partnered with Rapidus Corporation to address challenges in semiconductor design and manufacturing, focusing on AI-driven reference design flows and a strong intellectual property (IP) portfolio for Rapidus' 2nm gate-all-around (GAA) process [1][4] Group 1: Partnership and Technology - The collaboration aims to leverage Cadence's AI-driven design tools and Rapidus' semiconductor manufacturing advancements to meet increasing computational demands and stricter power, performance, and area requirements in the semiconductor industry [2][4] - Cadence provides a comprehensive suite of design tools tailored for the 2nm GAA BSPDN process, including Cadence Cerebrus, Genus, Innovus, and Voltus, among others [2][3] Group 2: Market Demand and Financial Performance - The semiconductor industry is experiencing growing demand for advanced hardware systems, particularly from AI, hyperscale, and automotive sectors, which are expected to positively impact Cadence's financial performance [7] - In the last reported quarter, Cadence's revenue increased by 18.8% year over year to $1.215 billion, surpassing estimates, and the company has narrowed its 2024 revenue forecast to $4.61-$4.65 billion [8] Group 3: Strategic Collaborations - Cadence is actively pursuing strategic partnerships, including recent collaborations with AST SpaceMobile, TSMC, and Samsung Foundry, to enhance its capabilities in AI-driven chip designs and advanced semiconductor systems [5][6]

Group 1: Partnership and Technology Development - Cadence Design Systems, Inc. (CDNS) has partnered with AST SpaceMobile, Inc. (ASTS) to enhance ASTS's mission of providing high-speed satellite internet access to smartphones [1] - ASTS is utilizing Cadence's advanced tools to develop the AST5000 ASIC chip, which is designed for low power consumption and aims to improve processing bandwidth by 10 times on each satellite [2][3] - The integration of Cadence's Palladium verification solution has helped ASTS address pre-silicon development challenges, ensuring the performance of the final design [4] Group 2: Satellite Network and Connectivity - ASTS is pioneering direct-to-cell technology with its space-based cellular broadband network, having successfully launched its first five Bluebird commercial satellites into low Earth orbit [5] - The new BlueBird satellites are expected to support up to 10,000 MHz of processing bandwidth, enabling data transmission speeds of up to 120 Mbps for global smartphone applications [6] Group 3: Market Position and Growth Potential - Cadence is positioned for growth due to its expanding product portfolio and strong demand from both existing and emerging markets [7] - The company is heavily investing in verification and digital design products to meet the increasing complexity in electronics and semiconductor industries [8] - Recent product launches, including the Palladium Z3 Emulation and Protium X3 FPGA Prototyping systems, offer significant performance improvements and are expected to see strong demand, particularly from AI, hyperscale, and automotive sectors [9][10]