Synopsys' Shares Rise 3.6%, but Will Momentum Last?

Synopsys (SNPS) shares ended 3.6% higher at $569.1, driven by strong momentum in AI and HPC, fueling growth across Synopsys’ product segments. The company is expected to post quarterly earnings of $3.84 per share, up 12% YoY, and revenues of $1.77 billion, up 16% YoY. The stock carries a Zacks Rank #3 (Hold).

Synopsys (SNPS) shares ended 3.6% higher at $569.1 on July 2, 2025, driven by strong momentum in AI and high-performance computing (HPC), fueling growth across the company's product segments. The semiconductor design software giant is expected to post quarterly earnings of $3.84 per share, up 12% year-over-year (YoY), and revenues of $1.77 billion, up 16% YoY. The stock carries a Zacks Rank #3 (Hold).

The surge in Synopsys' stock price comes amidst a broader trend of growth in the AI and HPC sectors, which are driving demand for advanced chip design tools. Synopsys' AI-driven design tools, such as CustomSim and DesignWare IP, are essential for firms like NVIDIA and AMD, which are ramping up HPC and GPU production [2].

Investors are also keeping a close eye on Synopsys' upcoming Q3 2025 earnings report scheduled for August 20. Analysts expect the company to report 16% revenue growth to $1.77 billion, fueled by AI chip design demand and its design IP business. Key metrics to watch include the progress of the proposed acquisition of Ansys, China revenue trends, and the expansion of the company's backlog and order trends [2].

The $14.3 billion deal to acquire Ansys is a significant strategic move for Synopsys, aiming to add $1.5 billion in annual simulation software revenue and expand its addressable market into multiphysics simulation—a $4 billion segment. However, regulatory scrutiny from U.S. and European authorities poses a risk to the deal's timely completion [2].

Synopsys' stock has rebounded sharply from a June 2025 low of $460.89, rising 21% to $559.28 by July 11 amid optimism around earnings and the Ansys deal. However, daily volatility, with swings of up to 5% in recent weeks, reflects investor wariness about execution risks [2].

Analysts project the stock could climb to $583.86 by August 2025, a 4% upside from current levels, assuming Q3 earnings beat expectations and regulatory clarity emerges [2].

Synopsys' near-term hurdles include regulatory delays, China revenue uncertainty, and valuation sensitivity. Yet, its long-term growth drivers—AI/HPC adoption, the Ansys deal, and a dominant EDA position—support a bullish case. Investors should monitor the August earnings report closely, as a strong beat and positive Ansys updates could reignite the stock's upward momentum [2].

References:
[1] https://stockanalysis.com/stocks/snps/revenue/
[2] https://www.ainvest.com/news/synopsys-snps-balancing-term-challenges-long-term-growth-potential-2507/