In the dynamic world of software applications, Cadence Design Systems, Inc. (CDNS) and Snowflake Inc. (SNOW) stand out as innovators with distinct yet overlapping market footprints. Cadence specializes in integrated circuit design and verification tools, while Snowflake leads in cloud-based data platforms. Both companies drive technology forward through innovation, making them compelling contenders for investors seeking growth in the tech sector. Let’s explore which of these industry leaders offers the best investment potential.
Table of contents
Companies Overview
I will begin the comparison between Cadence Design Systems and Snowflake by providing an overview of these two companies and their main differences.
Cadence Design Systems Overview
Cadence Design Systems, Inc. develops software, hardware, and services focused on integrated circuit (IC) design and verification. The company offers a broad portfolio including formal verification, logic simulation, and prototyping platforms, serving markets such as 5G communications, aerospace, automotive, and healthcare. Founded in 1987 and headquartered in San Jose, California, Cadence holds a strong position in the electronic design automation industry with a market cap of $86B.
Snowflake Overview
Snowflake Inc. provides a cloud-based data platform that consolidates data into a unified source to facilitate business insights and application development. Founded in 2012 and based in Bozeman, Montana, Snowflake targets diverse industries and company sizes with its Data Cloud platform. It operates in the software application sector and has a market cap of $70B, positioning itself as a significant player in cloud data management and analytics.
Key similarities and differences
Both Cadence and Snowflake operate in the technology sector within software applications, yet their business models differ fundamentally. Cadence focuses on electronic design automation tools and hardware for chip design, while Snowflake offers cloud-based data warehousing and analytics services. Both companies serve enterprise clients but address distinct market needs: hardware design and verification versus cloud data management, reflecting contrasting technological specializations and growth drivers.
Income Statement Comparison
This table compares the most recent full fiscal year income statement figures for Cadence Design Systems, Inc. and Snowflake Inc., highlighting key financial metrics.
| Metric | Cadence Design Systems, Inc. (2024) | Snowflake Inc. (2025) |
|---|---|---|
| Market Cap | 86.4B | 70.4B |
| Revenue | 4.64B | 3.63B |
| EBITDA | 1.67B | -1.10B |
| EBIT | 1.47B | -1.28B |
| Net Income | 1.06B | -1.29B |
| EPS | 3.89 | -3.86 |
| Fiscal Year | 2024 | 2025 |
Income Statement Interpretations
Cadence Design Systems, Inc.
Cadence Design Systems has exhibited a steady increase in revenue and net income from 2020 to 2024, with revenue growing from $2.68B to $4.64B and net income rising from $591M to $1.06B. Margins have remained strong and relatively stable, with a gross margin above 86% and net margin around 23% in 2024. The latest year showed solid revenue growth of 13.5%, though net margin slightly declined.
Snowflake Inc.
Snowflake’s revenue surged dramatically from $592M in 2021 to $3.63B in 2025, reflecting rapid expansion, but it remains unprofitable with net losses widening from -$539M to -$1.29B. Gross margin improved to 66.5% in 2025, yet EBIT and net margins stayed deeply negative, around -35%. The most recent year showed strong revenue growth of 29.2%, but profitability worsened significantly.
Which one has the stronger fundamentals?
Cadence Design Systems demonstrates stronger fundamentals with consistent profitability, favorable margins, and steady growth over five years. In contrast, Snowflake shows impressive revenue growth but persistent heavy losses and negative margins. While Snowflake’s growth trajectory is notable, its income statement reflects higher risk, whereas Cadence offers a more balanced financial profile.
Financial Ratios Comparison
The table below presents the most recent financial ratios for Cadence Design Systems, Inc. (CDNS) and Snowflake Inc. (SNOW), reflecting their fiscal year 2024 and 2025 data respectively.
| Ratios | Cadence Design Systems, Inc. (CDNS) FY 2024 | Snowflake Inc. (SNOW) FY 2025 |
|---|---|---|
| ROE | 22.58% | -42.86% |
| ROIC | 13.43% | -25.24% |
| P/E | 77.20 | -46.97 |
| P/B | 17.44 | 20.13 |
| Current Ratio | 2.93 | 1.75 |
| Quick Ratio | 2.74 | 1.75 |
| D/E (Debt-to-Equity) | 0.55 | 0.90 |
| Debt-to-Assets | 28.80% | 29.72% |
| Interest Coverage | 17.77 | -527.73 |
| Asset Turnover | 0.52 | 0.40 |
| Fixed Asset Turnover | 7.68 | 5.53 |
| Payout Ratio | 0 | 0 |
| Dividend Yield | 0 | 0 |
Interpretation of the Ratios
Cadence Design Systems, Inc.
Cadence presents mostly favorable financial ratios, including a strong net margin of 22.74% and a robust return on equity at 22.58%, indicating efficient profitability. However, valuation multiples like PE at 77.2 and PB at 17.44 appear stretched. The company does not pay dividends, likely focusing on reinvestment and growth rather than shareholder payouts.
Snowflake Inc.
Snowflake’s ratios reveal significant challenges, with negative net margin (-35.45%) and return on equity (-42.86%), reflecting ongoing losses. Certain liquidity ratios remain favorable, like a current ratio of 1.75, but interest coverage is deeply negative. Snowflake also pays no dividend, consistent with its high-growth strategy and reinvestment focus amid losses.
Which one has the best ratios?
Cadence Design Systems exhibits a more favorable overall ratio profile, with solid profitability and liquidity metrics, despite high valuation multiples. Snowflake’s financials indicate more risk, with multiple unfavorable profitability ratios and negative earnings, though some liquidity metrics are stable. Thus, Cadence’s ratios appear stronger in this comparison.
Strategic Positioning
This section compares the strategic positioning of Cadence Design Systems, Inc. (CDNS) and Snowflake Inc. (SNOW), including their market position, key segments, and exposure to technological disruption:
Cadence Design Systems, Inc.
- Well-established market leader in IC design software with steady competitive pressure.
- Focused on software, hardware, services for IC design verification and custom IC products.
- Exposure to disruption through advanced IC design technologies and evolving semiconductor needs.
Snowflake Inc.
- Emerging data cloud platform provider facing intense competition in cloud and data sectors.
- Concentrated on cloud-based data platform products and professional services.
- High exposure to cloud computing disruption and evolving data analytics demands.
Cadence Design Systems, Inc. vs Snowflake Inc. Positioning
Cadence offers a diversified portfolio across multiple IC design and verification segments, supporting various industries. Snowflake concentrates on cloud data platforms, targeting scalable data consolidation. Cadence’s diversification supports resilience, while Snowflake’s focus offers specialization benefits but may increase vulnerability to sector shifts.
Which has the best competitive advantage?
Cadence shows a slightly favorable moat with value creation despite declining ROIC, indicating some sustainable competitive advantage. Snowflake’s moat is very unfavorable, with value destruction and sharply declining ROIC, suggesting weaker competitive positioning.
Stock Comparison
The stock price chart highlights contrasting dynamics over the past year, with Cadence Design Systems showing a modest upward shift and Snowflake experiencing a significant decline, reflecting divergent investor sentiment and trading volumes.
Trend Analysis
Cadence Design Systems, Inc. exhibited a 4.59% price increase over the past 12 months, indicating a bullish trend with deceleration. The stock ranged from 232.88 to 373.35, with recent mild downward movement since November 2025.
Snowflake Inc. showed an 8.27% decline over the same period, confirming a bearish trend with deceleration. Its price fluctuated between 108.56 and 274.88, with accelerated losses in recent months ending January 2026.
Comparing both, Cadence Design Systems delivered the highest market performance, with positive annual growth contrasting Snowflake’s significant negative return.
Target Prices
Analysts provide a positive consensus on the target prices for both Cadence Design Systems, Inc. and Snowflake Inc.
| Company | Target High | Target Low | Consensus |
|---|---|---|---|
| Cadence Design Systems, Inc. | 418 | 275 | 381 |
| Snowflake Inc. | 325 | 237 | 281.86 |
The consensus target prices for both companies exceed their current stock prices, indicating analyst expectations of potential upside. Cadence’s consensus of 381 is above its current price of 317.45, while Snowflake’s consensus of 281.86 is well above its current 210.38.
Analyst Opinions Comparison
This section compares analysts’ ratings and financial scores for Cadence Design Systems, Inc. (CDNS) and Snowflake Inc. (SNOW):
Rating Comparison
CDNS Rating
- Rating: B, assessed as Very Favorable by analysts.
- Discounted Cash Flow Score: 3, indicating a moderate valuation perspective.
- ROE Score: 4, a favorable indicator of profit generation efficiency.
- ROA Score: 5, very favorable, reflecting strong asset utilization.
- Debt To Equity Score: 2, moderate financial risk level.
- Overall Score: 3, categorized as moderate overall financial standing.
SNOW Rating
- Rating: C-, also marked Very Favorable by analysts.
- Discounted Cash Flow Score: 3, showing a moderate valuation assessment.
- ROE Score: 1, considered very unfavorable for equity profitability.
- ROA Score: 1, very unfavorable, indicating weak asset efficiency.
- Debt To Equity Score: 1, very unfavorable, implying higher financial risk.
- Overall Score: 1, rated very unfavorable in overall financial evaluation.
Which one is the best rated?
Based on the provided data, CDNS is clearly better rated with superior scores in ROE, ROA, and a higher overall score. SNOW shows weaker financial metrics across key scores, resulting in a lower overall rating.
Scores Comparison
Here is a comparison of the Altman Z-Score and Piotroski Score for Cadence Design Systems and Snowflake Inc.:
Cadence Scores
- Altman Z-Score: 14.51, indicating a strong safe zone.
- Piotroski Score: 7, reflecting strong financial health.
Snowflake Scores
- Altman Z-Score: 5.36, indicating a safe zone.
- Piotroski Score: 4, indicating average financial health.
Which company has the best scores?
Cadence Design Systems shows a higher Altman Z-Score and a stronger Piotroski Score compared to Snowflake. This suggests Cadence currently has stronger financial stability and health based on these metrics.
Grades Comparison
Here is a comparison of the latest reliable grades from recognized grading companies for Cadence Design Systems, Inc. and Snowflake Inc.:
Cadence Design Systems, Inc. Grades
This table summarizes recent grades from major financial institutions for Cadence Design Systems, Inc.:
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Needham | Maintain | Buy | 2025-12-22 |
| Wells Fargo | Maintain | Overweight | 2025-10-28 |
| Baird | Maintain | Outperform | 2025-10-28 |
| Needham | Maintain | Buy | 2025-10-28 |
| JP Morgan | Maintain | Overweight | 2025-10-28 |
| Oppenheimer | Maintain | Underperform | 2025-10-28 |
| Rosenblatt | Maintain | Neutral | 2025-10-28 |
| Rosenblatt | Maintain | Neutral | 2025-10-22 |
| Needham | Maintain | Buy | 2025-07-29 |
| Loop Capital | Maintain | Buy | 2025-07-29 |
Overall, Cadence’s grades are predominantly positive, with multiple “Buy,” “Overweight,” and “Outperform” ratings, though a minority rating is “Underperform.”
Snowflake Inc. Grades
Below are the recent grades from key financial analysts for Snowflake Inc.:
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Barclays | Downgrade | Equal Weight | 2026-01-12 |
| Argus Research | Upgrade | Buy | 2026-01-08 |
| Citigroup | Maintain | Buy | 2025-12-08 |
| Wells Fargo | Maintain | Overweight | 2025-12-04 |
| Keybanc | Maintain | Overweight | 2025-12-04 |
| Piper Sandler | Maintain | Overweight | 2025-12-04 |
| Morgan Stanley | Maintain | Overweight | 2025-12-04 |
| Wedbush | Maintain | Outperform | 2025-12-04 |
| Deutsche Bank | Maintain | Buy | 2025-12-04 |
| Cantor Fitzgerald | Maintain | Overweight | 2025-12-04 |
Snowflake’s ratings are mostly positive with many “Buy,” “Overweight,” and “Outperform” grades, though there is a recent downgrade to “Equal Weight.”
Which company has the best grades?
Both Cadence Design Systems and Snowflake have predominantly positive grades, but Snowflake has a larger volume of “Buy” and “Overweight” ratings despite a recent downgrade. This suggests slightly stronger analyst conviction for Snowflake, potentially influencing investors seeking growth opportunities.
Strengths and Weaknesses
Below is a comparative overview of key strengths and weaknesses for Cadence Design Systems, Inc. (CDNS) and Snowflake Inc. (SNOW) based on their latest performance and market data.
| Criterion | Cadence Design Systems, Inc. (CDNS) | Snowflake Inc. (SNOW) |
|---|---|---|
| Diversification | Moderate diversification: mainly products with growing maintenance and technology services | Limited diversification: primarily product-focused with small professional services segment |
| Profitability | Strong profitability: net margin 22.74%, ROIC 13.43%, value creator with positive ROIC vs WACC | Negative profitability: net margin -35.45%, ROIC -25.24%, value destroyer with declining returns |
| Innovation | Consistent investment in technology services supporting product growth | High innovation focus but profitability challenges persist, impacting overall returns |
| Global presence | Established global footprint in electronic design automation | Growing global presence but still scaling internationally |
| Market Share | Solid market share in design automation tools with steady revenue growth ($4.2B product revenue in 2024) | Rapidly growing market share in cloud data platforms, product revenue $3.46B in 2025 |
Key takeaways: Cadence demonstrates strong financial health and value creation despite a slight decline in ROIC, supported by diversified revenue streams and profitability. Snowflake shows impressive revenue growth but faces significant profitability challenges, indicating higher risk for investors focused on stable returns.
Risk Analysis
Below is an overview of key risks for Cadence Design Systems, Inc. (CDNS) and Snowflake Inc. (SNOW) based on the latest available data from 2024 and 2025.
| Metric | Cadence Design Systems, Inc. (CDNS) | Snowflake Inc. (SNOW) |
|---|---|---|
| Market Risk | Beta 1.022, moderate market sensitivity | Beta 1.144, higher market sensitivity |
| Debt level | Debt-to-Equity 0.55 (neutral), Debt-to-Assets 28.8% (favorable) | Debt-to-Equity 0.9 (neutral), Debt-to-Assets 29.7% (favorable) |
| Regulatory Risk | Moderate, technology sector exposure to evolving IP and export controls | Moderate, cloud platform with data privacy regulations impact |
| Operational Risk | Medium, relies on complex software and hardware integration | Medium-high, dependent on cloud infrastructure and data security |
| Environmental Risk | Low, limited direct environmental impact | Low, primarily software and cloud services |
| Geopolitical Risk | Moderate, global supply chain and market exposure | Moderate, international cloud data regulations and geopolitical tensions |
The most impactful risks are market volatility and operational dependencies. Snowflake’s high beta and negative profitability metrics highlight elevated financial risk, while Cadence’s stable financials and strong Altman Z-score indicate lower bankruptcy risk. Both companies face regulatory and geopolitical challenges that require continuous monitoring.
Which Stock to Choose?
Cadence Design Systems, Inc. (CDNS) has shown favorable income growth with a 13.48% revenue increase in 2024 and strong profitability metrics, including a 22.74% net margin and a 22.58% ROE. Its debt levels remain moderate with a net debt to EBITDA slightly negative, and its financial ratios are globally favorable, supported by a very favorable B rating.
Snowflake Inc. (SNOW) displays strong revenue growth of 29.21% in 2025, but suffers from negative profitability with a -35.45% net margin and a -42.86% ROE. Its debt profile is higher with a 0.9 debt-to-equity ratio, and financial ratios are slightly unfavorable overall. The company holds a C- rating, but its score indicators show signs of financial distress despite a safe zone Altman Z-Score.
Investors focused on stability and quality might view Cadence Design Systems’ favorable profitability, moderate debt, and solid rating as more reassuring. Conversely, those with a higher risk tolerance seeking aggressive growth could see Snowflake’s rapid revenue expansion as attractive, despite its current profitability challenges and weaker rating.
Disclaimer: Investment carries a risk of loss of initial capital. The past performance is not a reliable indicator of future results. Be sure to understand risks before making an investment decision.
Go Further
I encourage you to read the complete analyses of Cadence Design Systems, Inc. and Snowflake Inc. to enhance your investment decisions:
