Here’s Why Cadence (CDNS) Surged in Q3

Core Insights - Brown Advisory's Large-Cap Growth Strategy reported a net return of -0.88% in Q3 2025, underperforming the Russell 1000 Growth Index due to underweighting speculative momentum-driven stocks despite significant exposure to AI [1] Company Summary: Cadence Design Systems, Inc. (NASDAQ:CDNS) - Cadence Design Systems, Inc. is a global provider of software, hardware, and services, with a one-month return of 3.59% and a 52-week gain of 10.64%, closing at $336.11 per share on December 3, 2025, with a market capitalization of $91.49 billion [2] - The company reported strong Q2 results with 20% year-over-year revenue growth and nearly 30% earnings growth, raising its full-year guidance. The strength was broad-based across electronic design automation (EDA), intellectual property (IP), and system design [3] - Cadence faced initial stock price pressure due to trade negotiations affecting its ability to sell software tools in China, but the situation was resolved, allowing the company to resume servicing Chinese customers, which reinforced investor confidence in its long-term growth trajectory [3] Investment Sentiment - Cadence Design Systems is not among the 30 most popular stocks among hedge funds, with 69 hedge fund portfolios holding the stock at the end of Q3 2025, up from 68 in the previous quarter. While the potential of Cadence is acknowledged, certain AI stocks are viewed as having greater upside potential and less downside risk [4]