In today's rapidly evolving technological landscape, few companies boast the pedigree and potential of Cadence Design Systems CDNS. This Zacks Rank #1 (Strong Buy) company provides essential electronic design automation (EDA) and system design enablement (SDE) software tools that are the backbone of the global chip-making industry.
As the demand for artificial intelligence continues to soar, Cadence Design is perfectly positioned to capitalize on this growth, making it a compelling opportunity for investors seeking exposure to the future of technology.
Exceptional Positioning
While companies like Nvidia and Tesla grab headlines for their cutting-edge AI hardware, Cadence plays a crucial yet often overlooked role in the development of these groundbreaking technologies. Their EDA and SDE software tools empower chip designers to create the complex and efficient microchips that power everything from smartphones to self-driving cars.
Furthermore, working in software within the semiconductor industry is a particularly appealing vertical. Semiconductor production is a very high capex intensive business, while software is a high margin low capex business. Candence Design enjoys gross margins of 90% and net margins of 26%.
Although the AI boom is a fantastic catalyst for CDNS, the company has been a top performer since well before the big development. Cadence Design stock has compounded at an annual rate of 35% over the last decade, considerably outperforming both the industry and broad market.
Rising Earnings Estimates
Although the earnings revision trend has languished in recent months, analysts have begun to turn bullish on expectations. In just the last week, earnings estimates have snapped higher. Earnings estimates for this year and next year have been revised higher by 2% and 6% respectively and are forecast to grow in the mid to high teens YoY.
Technical Picture
Adding fuel to the fire, Cadence's stock experienced a technical breakout at the end of last week, surpassing key resistance levels. After trading through the $310 level, momentum took control and carried the stock to new all-time highs.
CDNS stock looks ready to continue the rally.
Bottom Line
Cadence Design Systems is a real gem hiding within the technology sector and is poised to benefit from the advancement of AI among the other powerful trends in technology. Investors seeking exposure to the burgeoning AI market and a company with a proven track record of success should consider adding CDNS to their watchlists.
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In today's rapidly evolving technological landscape, few companies boast the pedigree and potential of Cadence Design Systems CDNS. This Zacks Rank #1 (Strong Buy) company provides essential electronic design automation (EDA) and system design enablement (SDE) software tools that are the backbone of the global chip-making industry.
As the demand for artificial intelligence continues to soar, Cadence Design is perfectly positioned to capitalize on this growth, making it a compelling opportunity for investors seeking exposure to the future of technology.
Exceptional Positioning
While companies like Nvidia and Tesla grab headlines for their cutting-edge AI hardware, Cadence plays a crucial yet often overlooked role in the development of these groundbreaking technologies. Their EDA and SDE software tools empower chip designers to create the complex and efficient microchips that power everything from smartphones to self-driving cars.
Furthermore, working in software within the semiconductor industry is a particularly appealing vertical. Semiconductor production is a very high capex intensive business, while software is a high margin low capex business. Candence Design enjoys gross margins of 90% and net margins of 26%.
Although the AI boom is a fantastic catalyst for CDNS, the company has been a top performer since well before the big development. Cadence Design stock has compounded at an annual rate of 35% over the last decade, considerably outperforming both the industry and broad market.
Rising Earnings Estimates
Although the earnings revision trend has languished in recent months, analysts have begun to turn bullish on expectations. In just the last week, earnings estimates have snapped higher. Earnings estimates for this year and next year have been revised higher by 2% and 6% respectively and are forecast to grow in the mid to high teens YoY.
Technical Picture
Adding fuel to the fire, Cadence's stock experienced a technical breakout at the end of last week, surpassing key resistance levels. After trading through the $310 level, momentum took control and carried the stock to new all-time highs.
CDNS stock looks ready to continue the rally.
Bottom Line
Cadence Design Systems is a real gem hiding within the technology sector and is poised to benefit from the advancement of AI among the other powerful trends in technology. Investors seeking exposure to the burgeoning AI market and a company with a proven track record of success should consider adding CDNS to their watchlists.
Just Released: Zacks Top 10 Stocks for 2024
Hurry – you can still get in early on our 10 top tickers for 2024. Hand-picked by Zacks Director of Research, Sheraz Mian, this portfolio has been stunningly and consistently successful. From inception in 2012 through November, 2023, the Zacks Top 10 Stocks gained +974.1%, nearly TRIPLING the S&P 500’s +340.1%. Sheraz has combed through 4,400 companies covered by the Zacks Rank and handpicked the best 10 to buy and hold in 2024. You can still be among the first to see these just-released stocks with enormous potential.
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