Synopsys Stock Climbs To Record Heights After Earnings Beat

Chip design software maker Synopsys (SNPS) late Wednesday beat analyst estimates for its fiscal fourth quarter. It also guided well above views for the current period. SNPS stock rose in extended trading.

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The Sunnyvale, Calif.-based company earned an adjusted $3.17 a share on sales of $1.6 billion in the quarter ended Oct. 31. Analysts polled by FactSet had expected earnings of $3.04 a share on sales of $1.59 billion. On a year-over-year basis, Synopsys earnings surged 66% while sales advanced 25%.

For the current quarter ending Jan. 31, Synopsys forecast adjusted earnings of $3.43 a share on sales of $1.645 billion. That’s based on the midpoint of its guidance. Analysts were looking for earnings of $3.05 a share on sales of $1.58 billion in the fiscal first quarter. In the year-earlier period, it earned an adjusted $2.62 a share on sales of $1.36 billion.

For the full fiscal year ahead, Synopsys predicted adjusted earnings of $13.37 a share on sales of $6.6 billion. That’s also based on the midpoint of its outlook. Wall Street was modeling earnings of $12.68 a share on sales of $6.59 billion. In the just-finished fiscal 2023, Synopsys earned an adjusted $11.19 a share on sales of $5.84 billion.

SNPS Stock In Record High Territory

In after-hours trading on the stock market today, SNPS stock climbed 2% to 563.32. During the regular session Wednesday, SNPS stock rose 1.6% to close at 552.46. Earlier in the day, Synopsys shares notched a regular-session all-time high of 557.

On Sept. 5, SNPS stock hit a buy point of 468.03 from a flat base, according to IBD MarketSmith charts.

Synopsys makes electronic design automation software that engineers use to design and test integrated circuits. The company also offers semiconductor intellectual property products.

“Our momentum continued in 2023 as we substantially expanded our AI-driven design differentiation, our semiconductor IP portfolio, and our multi-die system solutions,” Chief Executive Aart de Geus said in a news release.

In an interview with IBD, Chief Financial Officer Shelagh Glaser said AI is one of the company’s “big drivers,” yet it’s still in the “early innings.”

Artificial intelligence is fueling greater chip design activity, boosting sales of EDA tools and semiconductor IP.

“More people building more chips is good for business,” she said.

Synopsys Is On 3 IBD Lists

On Nov. 15, Synopsys introduced a generative artificial intelligence product to accelerate chip design. The tool, Synopsys.ai Copilot, is the result of a strategic collaboration with Microsoft (MSFT) that integrates Microsoft’s Azure OpenAI service.

SNPS stock is on three IBD stock lists: IBD 50, Tech Leaders and Long-Term Leaders lists.

Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.

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