Cadence Design Systems ((CDNS Quick QuoteCDNS - Free Report) ) and NVIDIA Corporation ((NVDA Quick QuoteNVDA - Free Report) ) have achieved a breakthrough with hardware-accelerated dynamic power analysis for billion-gate artificial intelligence (AI) designs, spanning billions of cycles, all completed in just a few hours with up to 97% accuracy. This advancement was made possible by combining the Cadence Palladium Z3 Enterprise Emulation Platform with the newly introduced Cadence Dynamic Power Analysis (DPA) App.

For semiconductor and system developers targeting AI, machine learning (ML) and GPU-accelerated applications, this represents a major advance, enabling unmatched power profiling capabilities and significantly speeding up time to market. Today’s advanced semiconductors and systems are so intricate that designers have difficulty accurately estimating their power consumption under real-world conditions.

Traditional power analysis tools cannot process more than a few hundred thousand cycles without becoming impractically slow. In collaboration with NVIDIA, Cadence has overcome this challenge using hardware-assisted power acceleration and parallel processing, achieving unprecedented accuracy across billions of cycles in early design stages.

The Palladium Z3 Platform’s DPA App allows accurate power consumption estimates in real-world workloads, helping designers verify functionality, power and performance before tapeout—when optimizations are still feasible. This is especially beneficial for AI, ML and GPU-accelerated applications, as early power modeling enhances energy efficiency and prevents delays caused by over- or under-designed chips. Integrated with Cadence’s analysis and implementation tools, Palladium DPA supports power estimation, reduction and signoff throughout the entire design cycle, aiding in the creation of the most efficient silicon and system designs.

CDNS Poised for Growth on Soaring AI & Hardware Demand

Broad-based demand for its solutions, especially the AI-driven portfolio, amid strong design activity, is a key catalyst. Secular trends like 5G, increasing use of hyperscale computing and autonomous driving are influencing design activity across semiconductor and systems companies. The focus on Generative AI, Agentic AI and Physical AI is leading to an exponential increase in computing demand and semiconductor innovation. This bodes well for Cadence.

To capitalize on this opportunity, it has been collaborating with several tech giants, including Qualcomm and NVIDIA, on their next-generation AI designs for both training and inference. Cadence is targeting new AI markets like Life Sciences through its OpenEye drug discovery software.

The company is also expanding partnerships with foundry partners such as Taiwan Semiconductor Manufacturing, Intel and Arm Holdings. Moving forward, the company is likely to benefit from customers increasing their R&D spending on AI-driven automation. On the last earnings call, Cadence highlighted that its efforts to unify EDA, IP, 3D-IC, PCB and system analysis are helping to capitalize on the opportunities presented by the AI super cycle. Additionally, customer R&D investments, especially in AI, remain strong.

However, intensifying competition, headwinds pertaining to international exposure and a high level of goodwill and intangible assets are major concerns for Cadence.

How CDNS’ Peers are Placed in the Broader Software Space

PTC Inc. ((PTC Quick QuotePTC - Free Report) ) is a software provider offering a range of cutting-edge digital technologies that collectively revolutionize the engineering, production and maintenance of tangible goods.

PTC is well-positioned to gain from its comprehensive product portfolio. The company’s solutions help industrial enterprises to enhance operational efficiency, accelerate product and service innovation and boost workforce productivity. Growing clout of the company’s major technology platforms, including its 3D modeling (CAD) offering Creo; lifecycle management (PLM) solution Windchill; data orchestration (IIoT) offering ThingWorx; and experience creation (AR) product Vuforia Studio, are expected to drive the top line.

However, it faces stiff competition in the CAD market from Cadence Design Systems, Autodesk, ANSYS and Synopsys, to mention a few. Considering the IIoT vertical, similar solutions from large established companies like Amazon, IBM, Oracle, SAP, Siemens AG and GE are likely to affect the adoption of PTC’s ThingWorx IoT platform. New entrants are likely to pressure prices or result in market share loss.

San Jose, CA-based Adobe Inc. ((ADBE Quick QuoteADBE - Free Report) ) is a leading technology company offering personalized digital experiences through the infusion of AI in its solutions.

Adobe continues to be the market leader in the Digital Media space. The company provides one of the best solutions in most categories of digital media design and publishing, including Internet and video. This indicates strong growth in the Creative Cloud and Document Cloud businesses. As advertising, entertainment and other content-creation markets are becoming increasingly digitalized, Adobe is well-positioned to benefit from this trend and should enjoy above-average long-term growth. Adobe entered the digital marketing space with the acquisition of Omniture. This is an area where corporate spending is on the rise.

However, Adobe is facing stiff competition in the AI and GenAI space from the likes of Microsoft -backed OpenAI, as well as a lack of monetization of its AI solutions.