Stock Analysis | Synopsys Outlook - Bearish Momentum and Regulatory Risks Weigh on the Stock

Market Snapshot

Headline Takeaway: Synopsys is in a bearish technical phase with weak momentum signals suggesting caution for investors. The stock has dropped by 3.43% recently, aligning with the negative price trend and pessimistic market sentiment. The technical score of 2.8 (internal diagnostic score, 0-10) indicates a weak trend, and the score evaluation advises avoiding the stock at this stage.

News Highlights

• US Imposes New Export Controls on Chip Design Software: On May 30, the US government introduced new export restrictions affecting chip design tools used by companies like Synopsys, Siemens EDA, and Cadence. This move aims to curtail China's access to advanced semiconductor design capabilities. Synopsys has reportedly halted new orders in China to comply with the new rules.
• Quest Software Secures $350M Capital Injection: In another sign of capital infusion in the tech space, Quest Software announced a $350 million funding round to accelerate growth and AI innovation. While not directly related to Synopsys, such moves highlight the competitive landscape and the value of strategic capital in the tech sector.

Analyst Views & Fundamentals

Analyst Ratings and Market Consensus

The current analyst consensus for Synopsys is mixed. The simple average rating is 4.50, while the historical performance-weighted rating is much lower at 1.62, indicating that past predictions have been weak. Recent analyst activity includes two "Underperform" ratings from Morgan Stanley and Rosenblatt. The ratings are not aligned with the negative price trend but show that the market remains pessimistic.

Fundamental Factors

Key fundamental values and their model scores include:

• Asset-Liability Ratio: 58.26% (score: 1.00 internal diagnostic score)
• ROA (Return on Assets): 1.45% (score: 3.00 internal diagnostic score)
• ROE (Return on Equity): 3.48% (score: 2.00 internal diagnostic score)
• Net Income to Revenue Ratio: 71.36% (score: 3.00 internal diagnostic score)
• Cash to Market Cap Ratio: -146.0% (score: 1.00 internal diagnostic score)

The fundamental score for Synopsys is 6.35 (internal diagnostic score, 0-10), suggesting a relatively decent financial position, though not strong enough to counteract the bearish technical indicators and regulatory headwinds.

Money-Flow Trends

Big money is flowing out of Synopsys with an overall negative trend in fund flows. The overall inflow ratio is at 48.40%, with large and extra-large investors also showing negative trends. Specifically, large investor inflows are at 50.36% and extra-large at 47.49%, while the block inflow ratio is 48.24%. Small and medium investors are also in outflow territory, with ratios of 49.86% and 49.58%, respectively.

This suggests institutional and major retail investors are taking a cautious stance, with no clear sign of a bottoming trend in the near term.

Key Technical Signals

Technical analysis for Synopsys is bearish, with 3 bearish indicators and no bullish ones. The technical score is 2.8 (internal diagnostic score, 0-10), and the score evaluation states that the technical side is weak, and investors should avoid the stock.

Recent Indicators by Date

• 2025-08-11: WR Oversold (score: 6.30 internal diagnostic score)
• 2025-08-12: Bullish Engulfing (score: 1.00 internal diagnostic score)
• 2025-08-06: MACD Death Cross (score: 1.00 internal diagnostic score)
• 2025-07-30: WR Overbought (score: 2.89 internal diagnostic score)

Despite a recent WR Oversold signal, the bearish indicators like MACD Death Cross and Bullish Engulfing dominate the technical picture. The bearish momentum is strong, and the recent chart patterns do not indicate a reversal in the near term.

Conclusion

For Synopsys investors, the current outlook is not favorable. The technical signals are clearly bearish, and the regulatory risks in China are adding pressure to the stock. While the fundamental score is moderate, it is not enough to counteract the negative momentum. Given the 2.8 technical score (internal diagnostic score, 0-10), we recommend waiting for a pull-back or clearer signs of a turnaround before taking a position. Until then, caution is advised, especially in light of recent regulatory actions and bearish chart patterns.