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The outperformance in the stock price led to a premium valuation, with SNPS stock trading at a P/S multiple of 8.7x, much above the industry P/E multiple of 6.47x. The premium valuation is further established by the Zacks Value Score of F.
SNPS Forward 12-Month (P/S) Valuation Chart
Image Source: Zacks Investment Research
Given these dynamics, investors are wondering if it’s the right time to buy, sell or hold the stock. Let’s dive into the fundamentals and financials of the stock and discuss what investors should do with SNPS right now.
AI Infrastructure Demand is Driving SNPS’ Growth
Synopsys gains from AI infrastructure buildout, driving strong system-level and semiconductor R&D spending and robust AI compute design activity. Synopsys is embedding AI across its product portfolio to automate engineering workflows and improve customer productivity. Synopsys has expanded beyond its traditional silicon design business with the acquisition of Ansys, adding multi-physics simulation capabilities to its portfolio. Ansys contributed 28.7% of revenue in the second quarter of fiscal 2026.
While generative AI could disrupt software companies, Synopsys gains from decades of deep engineering expertise, proprietary codebases and solvers, silicon-proven design technologies and foundry co-optimization capabilities. The company has been able to provide its customers with up to 50% faster knowledge assistance, 70% faster workflow assistance and 5x faster formal testbench generation.
Synopsys generates most of its revenue from recurring sources, which accounted for 82% of total revenue in the third quarter of fiscal 2026. Much of this revenue comes from time-based products, maintenance and services that are recognized over the life of a contract rather than upfront, creating more stable and predictable results. The company’s backlog stood at roughly $10.9 billion and includes non-cancellable Flexible Spending Account commitments, where customers can choose the product mix later.
Synopsys’ partnership with NVIDIA is likely to open new avenues of growth for the company. In 2025, Synopsys issued about 4.8 million shares in a private placement with NVIDIA for $2 billion of net proceeds. The added capital increases financial flexibility at a time when the company is integrating Ansys and investing across EDA, IP and simulation. It also deepens alignment with a leading AI compute platform, which matters as Synopsys expands AI-driven EDA solutions and automation across the design flow.
Given these tailwinds, Synopsys has been experiencing robust growth in both top and bottom lines. The Zacks Consensus Estimate for SNPS’ fiscal 2026 earnings is pegged at $15.13, indicating 17.2% year-over-year growth. Estimates have remained unchanged over the past 30 days.
Image Source: Zacks Investment Research
SNPS Strengthens Its Competitive Edge in the EDA Space
Synopsys faces competition from EDA vendors such as Cadence Design Systems Inc. (CDNS - Free Report) , Keysight Technologies (KEYS - Free Report) and Siemens (SIEGY - Free Report) . These companies offer products focused more on distinct phases of the IC design process and provide a range of services to companies throughout the world to help optimize their product development process, among other things.
Keysight Technologies competes in the electronic design and testing space, particularly providing software solutions for electromagnetic analysis, circuit simulation and hardware verification. Cadence benefits from higher design complexity and rising customer spend on AI-driven automation.
Amid rapid AI proliferation, the Cadence.ai portfolio has been gaining strength and new product launches like AgentStack, along with ChipStack, ViraStack and InnoStack AI Super Agents, are expected to aid in sustaining the momentum. Siemens EDA, which is Siemens' electronic design automation division, and Cadence Design Systems both provide EDA tools like software, hardware and services essential for designing chips and semiconductor devices.
However, SNPS is continuously improving its expertise in EDA with launches like the first Multiphysics Fusion solutions, combining AI-powered EDA tools with advanced multiphysics analysis to improve chip design accuracy, accelerate design closure and support AI and multi-die semiconductor development. Partnership with NVIDIA also positions SNPS higher than its competitors.
Conclusion: Buy SNPS Stock Now
Synopsys is gaining from design wins, driven by a broad product portfolio. Growth in the hybrid working trend is driving demand for bandwidth. Broad demand for advanced chip design, verification and simulation tools, along with a more diversified portfolio following the Ansys acquisition, is benefiting the company. Backlog and a high mix of recurring revenue improve visibility, and Design Automation continues to deliver the bulk of profits. Given these dynamics, we suggest that investors should accumulate this Zacks Rank #1 (Strong Buy) stock at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
View the Zacks #1 Rank List
Image: Bigstock
Synopsys Rises 34.5% in a Month: Should You Buy the Stock Now?
Key Takeaways
Synopsys, Inc. (SNPS - Free Report) shares have jumped 34.5% in the past month, outperforming the Zacks Computer - Software industry and the Zacks Computer and Technology sector’s appreciation of 7.5% and 5.2%, respectively.
SNPS YTD Performance Chart
Image Source: Zacks Investment Research
The outperformance in the stock price led to a premium valuation, with SNPS stock trading at a P/S multiple of 8.7x, much above the industry P/E multiple of 6.47x. The premium valuation is further established by the Zacks Value Score of F.
SNPS Forward 12-Month (P/S) Valuation Chart
Image Source: Zacks Investment Research
Given these dynamics, investors are wondering if it’s the right time to buy, sell or hold the stock. Let’s dive into the fundamentals and financials of the stock and discuss what investors should do with SNPS right now.
AI Infrastructure Demand is Driving SNPS’ Growth
Synopsys gains from AI infrastructure buildout, driving strong system-level and semiconductor R&D spending and robust AI compute design activity. Synopsys is embedding AI across its product portfolio to automate engineering workflows and improve customer productivity. Synopsys has expanded beyond its traditional silicon design business with the acquisition of Ansys, adding multi-physics simulation capabilities to its portfolio. Ansys contributed 28.7% of revenue in the second quarter of fiscal 2026.
While generative AI could disrupt software companies, Synopsys gains from decades of deep engineering expertise, proprietary codebases and solvers, silicon-proven design technologies and foundry co-optimization capabilities. The company has been able to provide its customers with up to 50% faster knowledge assistance, 70% faster workflow assistance and 5x faster formal testbench generation.
Synopsys generates most of its revenue from recurring sources, which accounted for 82% of total revenue in the third quarter of fiscal 2026. Much of this revenue comes from time-based products, maintenance and services that are recognized over the life of a contract rather than upfront, creating more stable and predictable results. The company’s backlog stood at roughly $10.9 billion and includes non-cancellable Flexible Spending Account commitments, where customers can choose the product mix later.
Synopsys’ partnership with NVIDIA is likely to open new avenues of growth for the company. In 2025, Synopsys issued about 4.8 million shares in a private placement with NVIDIA for $2 billion of net proceeds. The added capital increases financial flexibility at a time when the company is integrating Ansys and investing across EDA, IP and simulation. It also deepens alignment with a leading AI compute platform, which matters as Synopsys expands AI-driven EDA solutions and automation across the design flow.
Given these tailwinds, Synopsys has been experiencing robust growth in both top and bottom lines. The Zacks Consensus Estimate for SNPS’ fiscal 2026 earnings is pegged at $15.13, indicating 17.2% year-over-year growth. Estimates have remained unchanged over the past 30 days.
Image Source: Zacks Investment Research
SNPS Strengthens Its Competitive Edge in the EDA Space
Synopsys faces competition from EDA vendors such as Cadence Design Systems Inc. (CDNS - Free Report) , Keysight Technologies (KEYS - Free Report) and Siemens (SIEGY - Free Report) . These companies offer products focused more on distinct phases of the IC design process and provide a range of services to companies throughout the world to help optimize their product development process, among other things.
Keysight Technologies competes in the electronic design and testing space, particularly providing software solutions for electromagnetic analysis, circuit simulation and hardware verification. Cadence benefits from higher design complexity and rising customer spend on AI-driven automation.
Amid rapid AI proliferation, the Cadence.ai portfolio has been gaining strength and new product launches like AgentStack, along with ChipStack, ViraStack and InnoStack AI Super Agents, are expected to aid in sustaining the momentum. Siemens EDA, which is Siemens' electronic design automation division, and Cadence Design Systems both provide EDA tools like software, hardware and services essential for designing chips and semiconductor devices.
However, SNPS is continuously improving its expertise in EDA with launches like the first Multiphysics Fusion solutions, combining AI-powered EDA tools with advanced multiphysics analysis to improve chip design accuracy, accelerate design closure and support AI and multi-die semiconductor development. Partnership with NVIDIA also positions SNPS higher than its competitors.
Conclusion: Buy SNPS Stock Now
Synopsys is gaining from design wins, driven by a broad product portfolio. Growth in the hybrid working trend is driving demand for bandwidth. Broad demand for advanced chip design, verification and simulation tools, along with a more diversified portfolio following the Ansys acquisition, is benefiting the company. Backlog and a high mix of recurring revenue improve visibility, and Design Automation continues to deliver the bulk of profits. Given these dynamics, we suggest that investors should accumulate this Zacks Rank #1 (Strong Buy) stock at present. You can see the complete list of today’s Zacks #1 Rank stocks here.