Nvidia announced today at CES 2026 that it would help Siemens’ electronic design automation (EDA) software run on its GPUs in an attempt to speed up the chip-design process. Nearly all computer chips today are designed using EDA tools, and as chip features get smaller and transistors more numerous, the process has grown more computationally intensive.Beyond speeding chip development, Nvidia and Siemens are aiming to create digital facsimiles, from chips to entire racks, to test their function before they’re ...

Sunnyvale, California-based Synopsys, Inc. (SNPS) is a leader in electronic design automation (EDA) software, semiconductor intellectual property (IP), and silicon-to-systems solutions. Valued at a market cap of $76.1 billion, the company’s tools enable engineers to create complex integrated circuits and system-on-chips for applications spanning AI, automotive, cloud computing, mobile, and high-performance computing. Companies valued at $10 billion or more are typically classified as “large-cap stocks,” a ...

Core Viewpoint - Synopsys, a key player in electronic design automation (EDA) and semiconductor intellectual property, has seen its stock drop nearly 30% following disappointing Q3 results and a weak outlook, raising concerns about its growth trajectory and potential investment value [2]. Financial Performance - For Q3, Synopsys reported revenue of $1.74 billion, a 14% year-over-year increase, but below the consensus estimate of approximately $1.77 billion [4]. - Adjusted earnings were $3.39 per share, significantly lower than both analyst expectations and the company's guidance of $3.82 to $3.87 [4]. - The company anticipates Q4 revenue of up to $2.26 billion and EPS between $2.76 and $2.80, which is considerably weaker than the more than $4 per share forecasted by analysts [4]. Workforce and Operational Challenges - Synopsys announced a 10% reduction in its workforce, indicating strain in certain business segments [4]. - The company faced temporary U.S. export restrictions affecting its relationship with Chinese clients, leading to paused or canceled design projects and hesitance in long-term agreements [5]. Customer Relationships - Issues with a key foundry customer, believed to be Intel, have impacted results, as Intel has scaled back its "18A" foundry program, affecting Synopsys's resource allocation [6]. Valuation Metrics - Synopsys's stock trades at a price-to-sales ratio of 10.6x and a price-to-earnings ratio of 34.1x, both significantly above S&P 500 averages [7]. - Despite the high valuation, the company has shown nearly 10% annual revenue growth over the past three years, with operating margins at 17.2% and free cash flow margins at 22% [7]. Competitive Position - Synopsys maintains a sustainable competitive edge in EDA software and semiconductor IP, supported by strong connections with leading foundries and semiconductor companies [8]. - The extensive scale of its tools generates valuable datasets that enhance its AI-driven solutions, providing a competitive advantage over smaller rivals [8]. Historical Resilience - Historical trends indicate that Synopsys has rebounded more rapidly than the S&P 500 during significant downturns over the past two decades, suggesting resilience [9]. - The recent stock decline may present a long-term investment opportunity for those looking to increase exposure to a well-established player in semiconductor design [9].

Core Viewpoint - Synopsys' shares fell nearly 27% following a disappointing third-quarter earnings report, highlighting significant near-term challenges for the company [1]. Group 1: Business Overview - Synopsys primarily operates in electronic design automation (EDA), providing software solutions for chip design and testing [3]. - The company has recently acquired Ansys, enhancing its capabilities with a "silicon-to-systems" approach, which has shown a 23.5% year-over-year growth in the EDA segment [3]. Group 2: Challenges Faced - The design intellectual property (IP) segment, which accounts for about 25% of total sales, experienced an almost 8% year-over-year decline in sales [4]. - CEO Sassine Ghazi identified three main issues affecting the design IP segment: 1. Previous export restrictions to China created uncertainty, impacting customer commitments [5]. 2. A major foundry customer is encountering end-market challenges [5]. 3. Synopsys needs to realign its resource allocation to target higher-growth markets more effectively [5]. Group 3: Future Outlook - The "silicon-to-systems" strategy aligns well with the increasing integration of AI and chips across various products, suggesting strong long-term growth potential for Synopsys [7]. - However, resolving the current issues in the design IP segment may take time and is not expected to be fully addressed in the near term [7].

Group 1 - Autodesk has reportedly backed off from a potential acquisition of PTC, focusing instead on organic investments and smaller acquisitions [2][3] - Following the speculation of the acquisition, Autodesk's stock initially fell, while PTC's stock experienced a significant rise, typical of merger arbitrage activities [2][3] - Despite the acquisition talks being off the table, PTC remains an attractive investment due to its consistent double-digit growth in software subscriptions and the increasing adoption of digital technologies [12][13] Group 2 - PTC is seen as a highly attractive asset in the context of ongoing consolidation in the industrial software sector, with notable acquisitions by companies like Siemens and Synopsys [5][6] - A potential combination of Autodesk and PTC would create a stronger competitor against European leaders in the CAD/PLM/CAE space, enhancing their market position [8][9] - PTC's solutions are integral to modern manufacturing, with expectations of continued growth in annual recurring revenue (ARR) and free cash flow, making it a solid option for diversified growth portfolios [12][13]

Investment Rating - The investment rating for Empyrean Technology Co Ltd is Equal-weight [4] Core Viewpoints - The recent lifting of US export restrictions allows Synopsys and Cadence to restore access to their software and technology for customers in China, which is significant for the EDA market [1] - Empyrean Technology, the largest local vendor in China, held a 10% market share in 2024, but its stock has declined by 10% over the past month, contrasting with the CSI 300 index's 3% increase [2] - The report suggests that achieving full flow in digital EDA by Empyrean Technology by the end of 2025 is unlikely, with potential delays extending to 2027 due to M&A processes [2] - The current valuation of Empyrean Technology at 37x NTM P/S is significantly higher than its global peers, indicating that future market share gains are already priced in [2] Financial Summary - Price target for Empyrean Technology is set at Rmb115.00, representing a downside of 4% from the current price of Rmb119.30 [4] - Market capitalization is Rmb64,773 million with 543 million shares outstanding [4] - Revenue projections show growth from Rmb1,222 million in 2024 to Rmb2,666 million by 2027 [4] - EPS is expected to increase from Rmb0.20 in 2024 to Rmb1.65 in 2027 [4] - EBITDA is projected to improve from a loss of Rmb14 million in 2024 to a profit of Rmb914 million by 2027 [4]