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Cadence & Lightmatter Team Up to Scale Optical Connectivity for AI
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Key Takeaways
Cadence announced a collaboration with Lightmatter to develop manufacturing-ready CPO platforms.
CDNS is combining SerDes and UCIe IP with Lightmatter's Passage optical engine for AI and HPC systems.
Cadence said the effort targets higher bandwidth density and power efficiency for scale-up data centers.
Cadence Design Systems, Inc. (CDNS - Free Report) has announced a new technical collaboration with Lightmatter to accelerate the development of co-packaged optics (CPO) solutions for next-generation AI and high-performance computing (HPC) systems. The partnership brings together Cadence’s silicon-proven, high-speed SerDes IP and Universal Chiplet Interconnect Express (UCIe) technology with Lightmatter’s Passage optical engine.
By aligning advanced-node CMOS integration and industry-standard packaging workflows, the two companies aim to deliver manufacturing-ready CPO platforms capable of meeting the escalating bandwidth and power-efficiency demands of modern AI infrastructure.
The shift toward CPO marks a pivotal evolution in data center architecture, moving beyond traditional pluggable optics and near-packaged solutions to fully integrated 2D and 3D-stacked photonic interconnects.
Through this collaboration, Cadence’s optics-optimized connectivity IP, chiplet disaggregation capabilities and deep EDA expertise are being combined with Lightmatter’s leadership in silicon photonics and integrated lasers. Together, they are establishing a roadmap of silicon-proven technologies designed to support hyperscalers as they build custom AI and HPC chips with unprecedented performance and scalability.
As AI workloads continue to grow rapidly, both scale-up and scale-out architectures are reshaping the requirements of data center connectivity. Cadence emphasized that integrating its high-speed SerDes and UCIe IP into a CPO platform is central to enabling more scalable, power-efficient systems.
The collaboration underscores Cadence’s broader commitment to advancing optical interconnect solutions that optimize data movement, reduce energy consumption and unlock higher bandwidth density across AI clusters.
Strategic acquisition strategy has played a pivotal part in developing Cadence’s business in the last few years. In October, 2025, CDNS completed the acquisition of Secure-IC. The buyout will expand its IP portfolio, including interface, memory, AI and DSP solutions. In September 2025, Cadence inked a definitive agreement to acquire the Design & Engineering (D&E) division of Hexagon AB, including its renowned MSC Software business, in a deal worth €2.7 billion. The buyout will extend its presence in the multi-billion-dollar structural analysis market.
The company is well-positioned to gain from rising demand for its solutions, especially the AI-driven portfolio, amid robust design activity and strong spending by customers on AI initiatives. With rapid AI proliferation, the Cadence.ai portfolio has been gaining strength, and the new product launches (like Cerebrus AI Studio) are expected to aid in sustaining the momentum. The latest hardware systems continue to gain traction from AI, HPC and automotive companies. Cadence's inorganic strategy is the calculated execution of its Intelligent System Design vision.
For the fourth quarter of 2025, revenues are estimated to be in the $1.405-$1.435 billion band. The company reported sales of $1.356 billion in the year-ago quarter. Non-GAAP EPS is anticipated to be between $1.88 and $1.94. It reported EPS of $1.88 in the year-ago quarter.
Cadence is scheduled to report fourth-quarter and fiscal 2025 results on Feb. 17, 2026.
CDNS’ Zacks Rank & Stock Price Performance
CDNS currently has a Zacks Rank #3 (Hold). Shares of the company have jumped 7.6% in the past year compared with the Zacks Computer-Software industry’s growth of 0.1%.
Image Source: Zacks Investment Research
Stocks to Consider From the Computer and Technology Space
SAP’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 8.75%. In the last reported quarter, SAP delivered an earnings surprise of 10.06%. Its shares have declined 11.8% in the past year.
Synopsys’ earnings beat the Zacks Consensus Estimate in three of the trailing four quarters while missing in one, with the average surprise being 2.08%. In the last reported quarter, SNPS delivered an earnings surprise of 3.94%. Its shares have lost 4.4% in the past year.
Microsoft’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 8.53%. In the last reported quarter, MSFT delivered an earnings surprise of 13.15%. Its shares have gained 5.9% in the past year.
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Cadence & Lightmatter Team Up to Scale Optical Connectivity for AI
Key Takeaways
Cadence Design Systems, Inc. (CDNS - Free Report) has announced a new technical collaboration with Lightmatter to accelerate the development of co-packaged optics (CPO) solutions for next-generation AI and high-performance computing (HPC) systems. The partnership brings together Cadence’s silicon-proven, high-speed SerDes IP and Universal Chiplet Interconnect Express (UCIe) technology with Lightmatter’s Passage optical engine.
By aligning advanced-node CMOS integration and industry-standard packaging workflows, the two companies aim to deliver manufacturing-ready CPO platforms capable of meeting the escalating bandwidth and power-efficiency demands of modern AI infrastructure.
The shift toward CPO marks a pivotal evolution in data center architecture, moving beyond traditional pluggable optics and near-packaged solutions to fully integrated 2D and 3D-stacked photonic interconnects.
Cadence Design Systems, Inc. Price and Consensus
Cadence Design Systems, Inc. price-consensus-chart | Cadence Design Systems, Inc. Quote
Through this collaboration, Cadence’s optics-optimized connectivity IP, chiplet disaggregation capabilities and deep EDA expertise are being combined with Lightmatter’s leadership in silicon photonics and integrated lasers. Together, they are establishing a roadmap of silicon-proven technologies designed to support hyperscalers as they build custom AI and HPC chips with unprecedented performance and scalability.
As AI workloads continue to grow rapidly, both scale-up and scale-out architectures are reshaping the requirements of data center connectivity. Cadence emphasized that integrating its high-speed SerDes and UCIe IP into a CPO platform is central to enabling more scalable, power-efficient systems.
The collaboration underscores Cadence’s broader commitment to advancing optical interconnect solutions that optimize data movement, reduce energy consumption and unlock higher bandwidth density across AI clusters.
Strategic acquisition strategy has played a pivotal part in developing Cadence’s business in the last few years. In October, 2025, CDNS completed the acquisition of Secure-IC. The buyout will expand its IP portfolio, including interface, memory, AI and DSP solutions. In September 2025, Cadence inked a definitive agreement to acquire the Design & Engineering (D&E) division of Hexagon AB, including its renowned MSC Software business, in a deal worth €2.7 billion. The buyout will extend its presence in the multi-billion-dollar structural analysis market.
The company is well-positioned to gain from rising demand for its solutions, especially the AI-driven portfolio, amid robust design activity and strong spending by customers on AI initiatives. With rapid AI proliferation, the Cadence.ai portfolio has been gaining strength, and the new product launches (like Cerebrus AI Studio) are expected to aid in sustaining the momentum. The latest hardware systems continue to gain traction from AI, HPC and automotive companies. Cadence's inorganic strategy is the calculated execution of its Intelligent System Design vision.
For the fourth quarter of 2025, revenues are estimated to be in the $1.405-$1.435 billion band. The company reported sales of $1.356 billion in the year-ago quarter. Non-GAAP EPS is anticipated to be between $1.88 and $1.94. It reported EPS of $1.88 in the year-ago quarter.
Cadence is scheduled to report fourth-quarter and fiscal 2025 results on Feb. 17, 2026.
CDNS’ Zacks Rank & Stock Price Performance
CDNS currently has a Zacks Rank #3 (Hold). Shares of the company have jumped 7.6% in the past year compared with the Zacks Computer-Software industry’s growth of 0.1%.
Image Source: Zacks Investment Research
Stocks to Consider From the Computer and Technology Space
Some better-ranked stocks from the broader technology space are SAP (SAP - Free Report) , Synopsys, Inc. (SNPS - Free Report) and Microsoft Corporation (MSFT - Free Report) . SAP, SNPS and MSFT all carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
SAP’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 8.75%. In the last reported quarter, SAP delivered an earnings surprise of 10.06%. Its shares have declined 11.8% in the past year.
Synopsys’ earnings beat the Zacks Consensus Estimate in three of the trailing four quarters while missing in one, with the average surprise being 2.08%. In the last reported quarter, SNPS delivered an earnings surprise of 3.94%. Its shares have lost 4.4% in the past year.
Microsoft’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 8.53%. In the last reported quarter, MSFT delivered an earnings surprise of 13.15%. Its shares have gained 5.9% in the past year.