What Makes Synopsys (SNPS) a Great Business?

Core Insights - Polen Capital's "Polen Focus Growth Strategy" reported a 3.34% (gross) and 3.14% (net) return in Q3 2025, underperforming the Russell 1000 Growth Index (10.51%) and S&P 500 Index (8.12%) [1] - The equity market's strong performance was attributed to enthusiasm for generative AI and strength in the semiconductor sector, alongside positive economic surprises and better-than-expected corporate earnings [1] Company Summary: Synopsys, Inc. (NASDAQ:SNPS) - Synopsys, Inc. is a leader in electronic design automation (EDA) software, crucial for semiconductor companies in chip design and testing [2][3] - The stock experienced a one-month return of 5.17% but a significant 13.44% decline over the past 52 weeks, closing at $448.00 per share with a market capitalization of $83.215 billion on October 13, 2025 [2] - Polen Capital initiated a new position in Synopsys, taking advantage of a ~35% decline in share price due to temporary revenue misses, viewing it as a strong long-term growth opportunity driven by trends in chip democratization and generative AI [3] Market Position and Hedge Fund Interest - Synopsys, Inc. was held by 66 hedge fund portfolios at the end of Q2 2025, a slight decrease from 67 in the previous quarter, indicating stable interest among institutional investors [4] - Despite its potential, some analysts suggest that other AI stocks may offer greater upside with less downside risk compared to Synopsys [4]