In the fast-evolving tech landscape, Synopsys, Inc. (SNPS) and Cadence Design Systems, Inc. (CDNS) stand out as key players in electronic design automation (EDA). Both companies share a focus on software solutions for integrated circuit design, making them prime candidates for comparison. Their innovative strategies and overlapping markets in the semiconductor industry position them as formidable competitors. In this article, I will analyze their strengths and weaknesses to help you determine which company might be the more compelling investment opportunity.
Table of contents
Company Overview
Synopsys, Inc. Overview
Synopsys, Inc. (SNPS) specializes in electronic design automation (EDA) software, providing essential tools for designing and testing integrated circuits. Founded in 1986 and headquartered in Mountain View, California, the company supports various industries, including automotive, healthcare, and financial services. Its flagship offerings include the Fusion Design Platform and Verification Continuum Platform, which streamline the design process and enhance verification capabilities. With a market capitalization of approximately $88.4B and a workforce of 20,000 employees, Synopsys is positioned as a leader in the technology sector, continuously innovating to keep pace with the evolving demands of semiconductor design.
Cadence Design Systems, Inc. Overview
Cadence Design Systems, Inc. (CDNS) provides a comprehensive suite of software and hardware solutions for integrated circuit design. Established in 1987 and based in San Jose, California, Cadence caters to a diverse range of markets such as 5G communications, aerospace, and automotive. With a market cap of around $92.0B and a team of 12,837, the company offers advanced functional verification and design tools, including JasperGold and Palladium platforms. Cadence’s emphasis on customizability and efficiency in design processes has solidified its position as a key player in the EDA industry, driving innovation in chip development.
Key similarities and differences
Both Synopsys and Cadence operate within the electronic design automation sector, emphasizing software solutions for integrated circuit design and verification. However, Synopsys leans towards comprehensive design platforms, while Cadence focuses more on functional verification and custom IC design services. Their distinct offerings cater to slightly different market needs, yet both companies remain integral to the semiconductor industry’s growth and technological advancement.
Income Statement Comparison
The following table provides a comparison of the most recent income statements for Synopsys, Inc. (SNPS) and Cadence Design Systems, Inc. (CDNS).
| Metric | Synopsys, Inc. (SNPS) | Cadence Design Systems, Inc. (CDNS) |
|---|---|---|
| Market Cap | 88.36B | 92.02B |
| Revenue | 7.05B | 4.64B |
| EBITDA | 914.93M | 1.67B |
| EBIT | 914.93M | 1.47B |
| Net Income | 1.34B | 1.06B |
| EPS | 8.77 | 3.89 |
| Fiscal Year | 2025 | 2024 |
Interpretation of Income Statement
The income statements reveal a solid growth trajectory for both companies, with Synopsys achieving a revenue increase to 7.05B in FY 2025 from 6.13B in FY 2024. Cadence also exhibited growth, advancing to 4.64B in FY 2024 from 4.09B in FY 2023. Notably, Synopsys’s net income surged to 1.34B, showcasing robust profitability despite rising operational costs. Cadence’s margins remained stable, reflecting efficient cost management. Overall, Synopsys’s performance indicates stronger growth dynamics compared to Cadence, which faced slightly slower growth in the same period.
Financial Ratios Comparison
In this section, I provide a comparative overview of the most recent financial ratios for Synopsys, Inc. (SNPS) and Cadence Design Systems, Inc. (CDNS). This analysis will help in assessing their financial health and performance.
| Metric | SNPS | CDNS |
|---|---|---|
| ROE | 25.17% | 22.58% |
| ROIC | 12.04% | 13.43% |
| P/E | 34.75 | 70.47 |
| P/B | 8.75 | 21.55 |
| Current Ratio | 2.44 | 2.93 |
| Quick Ratio | 2.30 | 2.74 |
| D/E | 0.08 | 0.22 |
| Debt-to-Assets | 5.24% | 13.48% |
| Interest Coverage | 38.56 | 17.77 |
| Asset Turnover | 0.47 | 0.52 |
| Fixed Asset Turnover | 5.43 | 7.68 |
| Payout Ratio | 0% | 0% |
| Dividend Yield | 0% | 0% |
Interpretation of Financial Ratios
Both companies exhibit strong financial health, but with some nuances. SNPS has a higher return on equity (ROE) and interest coverage ratio, indicating robust profitability and debt management. However, CDNS boasts a slightly superior return on invested capital (ROIC) and asset turnover, suggesting efficient use of capital. The high P/E ratio for CDNS may indicate overvaluation, warranting caution for potential investors. Overall, both companies present solid investment opportunities, but I recommend careful consideration of valuation metrics.
Dividend and Shareholder Returns
Both Synopsys, Inc. (SNPS) and Cadence Design Systems, Inc. (CDNS) do not pay dividends, reflecting a strategy focused on reinvestment for growth and innovation. Both companies are in high-growth phases, allocating their resources towards R&D and acquisitions rather than returning cash to shareholders. However, they both engage in share buyback programs, which can enhance shareholder value by reducing share dilution. This approach aligns with sustainable long-term value creation, as it positions both companies to capitalize on future opportunities.
Strategic Positioning
Synopsys, Inc. (SNPS) and Cadence Design Systems, Inc. (CDNS) both hold significant market shares in the electronic design automation (EDA) sector. As of now, SNPS boasts a market cap of $88.4B, while CDNS stands at $92B. Competitive pressures are high, with both companies innovating rapidly to address technological disruptions, particularly in AI-driven design tools and verification processes. The landscape remains dynamic, compelling both firms to enhance their product offerings to maintain or grow their market positions.
Stock Comparison
In analyzing the recent trading dynamics and price movements for Synopsys, Inc. (SNPS) and Cadence Design Systems, Inc. (CDNS), we can observe significant fluctuations and trends that have emerged over the past year.
Trend Analysis
For Synopsys, Inc. (SNPS), the overall trend shows a price change of -8.02% over the past year, indicating a bearish trend. The highest price reached during this period was 621.3, while the lowest was 388.13. The trend is characterized by deceleration, suggesting a slowing down of the downtrend. Additionally, the standard deviation of 58.67 indicates notable volatility in the stock’s price.
In the recent analysis period from September 28, 2025, to December 14, 2025, the price change was -2.45%. This also reflects a bearish trend with a trend slope of -3.07, indicating a continued decline, though at a slower pace. The standard deviation of 33.9 during this period also points to moderate volatility.
Conversely, for Cadence Design Systems, Inc. (CDNS), the overall price change has been +15.72% over the last year, marking a bullish trend. The stock peaked at 373.35 and dipped to a low of 232.88. Similar to SNPS, the trend is experiencing deceleration, as indicated by the overall trend dynamics. The standard deviation of 29.08 reflects a moderate level of volatility.
During the recent period from September 28, 2025, to December 14, 2025, CDNS saw a price change of -3.44%, which indicates a neutral trend within the context of recent price movements. The trend slope of -1.95 shows a slight decline, while the standard deviation of 14.72 suggests lower volatility compared to its overall trend.
In summary, both stocks exhibit unique trends and dynamics, with SNPS on a sustained downward trajectory and CDNS showing strong overall performance despite recent challenges.
Analyst Opinions
Recent analyst recommendations for Synopsys, Inc. (SNPS) reflect a consensus rating of “Buy” with a B+ rating. Analysts highlight strong performance in discounted cash flow and return on assets as key strengths. In contrast, Cadence Design Systems, Inc. (CDNS) holds a “Hold” rating with a B, as analysts see potential but express concerns regarding its price-to-earnings metrics. Overall, I note that the consensus for the current year leans towards a “Buy” for SNPS, while CDNS remains under evaluation.
Stock Grades
I have gathered the most recent stock grades for two companies, Synopsys, Inc. (SNPS) and Cadence Design Systems, Inc. (CDNS), from recognized grading firms.
Synopsys, Inc. Grades
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Piper Sandler | maintain | Overweight | 2025-12-11 |
| Rosenblatt | upgrade | Buy | 2025-12-09 |
| B of A Securities | upgrade | Neutral | 2025-12-08 |
| Keybanc | maintain | Overweight | 2025-12-03 |
| Wells Fargo | maintain | Equal Weight | 2025-11-25 |
| Morgan Stanley | maintain | Overweight | 2025-09-11 |
| Mizuho | maintain | Outperform | 2025-09-11 |
| Baird | downgrade | Neutral | 2025-09-10 |
| Piper Sandler | maintain | Overweight | 2025-09-10 |
| Keybanc | maintain | Overweight | 2025-09-10 |
Cadence Design Systems, Inc. Grades
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Rosenblatt | maintain | Neutral | 2025-10-28 |
| Wells Fargo | maintain | Overweight | 2025-10-28 |
| JP Morgan | maintain | Overweight | 2025-10-28 |
| Needham | maintain | Buy | 2025-10-28 |
| Oppenheimer | maintain | Underperform | 2025-10-28 |
| Baird | maintain | Outperform | 2025-10-28 |
| Rosenblatt | maintain | Neutral | 2025-10-22 |
| Keybanc | maintain | Overweight | 2025-07-29 |
| Wells Fargo | maintain | Overweight | 2025-07-29 |
| Mizuho | maintain | Outperform | 2025-07-29 |
Overall, the trend for SNPS shows a mix of upgrades and consistent support from various firms, indicating a generally positive outlook despite some downgrades. For CDNS, the grades suggest stability with a strong emphasis on maintaining overweight positions, reflecting confidence in its performance.
Target Prices
The consensus target prices for Synopsys, Inc. (SNPS) and Cadence Design Systems, Inc. (CDNS) are indicative of positive analyst outlooks for both companies.
| Company | Target High | Target Low | Consensus |
|---|---|---|---|
| Synopsys, Inc. | 630 | 425 | 529.17 |
| Cadence Design Systems, Inc. | 418 | 275 | 381 |
For Synopsys, the current price of 475.73 is below the consensus target of 529.17, suggesting potential upside. Similarly, Cadence’s stock is trading at 338.06, compared to a consensus of 381, which also indicates room for growth.
Strengths and Weaknesses
The following table summarizes the strengths and weaknesses of Synopsys, Inc. (SNPS) and Cadence Design Systems, Inc. (CDNS) based on recent data.
| Criterion | Synopsys, Inc. (SNPS) | Cadence Design Systems, Inc. (CDNS) |
|---|---|---|
| Diversification | High | Moderate |
| Profitability | High (Net Margin: 19%) | High (Net Margin: 25%) |
| Innovation | Strong | Very Strong |
| Global presence | Strong | Strong |
| Market Share | 11% | 10% |
| Debt level | Low (Debt/Equity: 0.08) | Moderate (Debt/Equity: 0.55) |
Key takeaways from this analysis indicate that both companies exhibit strong profitability and global presence, but Synopsys has a more diversified portfolio and lower debt levels. Cadence, however, excels in innovation, which may position it favorably for future growth.
Risk Analysis
In the table below, I will outline key risks associated with Synopsys, Inc. (SNPS) and Cadence Design Systems, Inc. (CDNS) to help you understand their potential impact on investment decisions.
| Metric | Synopsys, Inc. | Cadence Design Systems, Inc. |
|---|---|---|
| Market Risk | Moderate | High |
| Regulatory Risk | Moderate | Moderate |
| Operational Risk | Low | Moderate |
| Environmental Risk | Low | Low |
| Geopolitical Risk | Moderate | High |
Both companies face significant market and geopolitical risks, especially given the volatile nature of the technology sector. Recent supply chain disruptions and regulatory changes impact their operations and profitability, making vigilance essential for investors.
Which one to choose?
In analyzing Synopsys, Inc. (SNPS) and Cadence Design Systems, Inc. (CDNS), it is evident that both companies operate in the semiconductor industry with distinct strengths. SNPS boasts a higher net profit margin at 19%, compared to CDNS’s 15%. However, CDNS presents a more favorable current ratio of 2.93 versus SNPS’s 2.44, indicating better short-term financial health. In terms of stock performance, CDNS has shown a bullish trend with a price change of +15.72%, while SNPS has faced a bearish trend with a decline of -8.02%. Analyst ratings reflect this, with SNPS rated B+ and CDNS rated B.
For growth-focused investors, CDNS may be more appealing due to its positive stock momentum and financial ratios. Conversely, SNPS might attract those prioritizing profitability.
Risks include competition and valuation concerns in the semiconductor sector.
Disclaimer: This article is not financial advice. Each investor is responsible for their own investment decisions.
Go further
I encourage you to read the complete analyses of Synopsys, Inc. and Cadence Design Systems, Inc. to enhance your investment decisions:
