Synopsys Is Getting Bigger, Not Growing Faster

Same bell, same clock, one question: is Synopsys really growing faster, or is it just getting bigger? The duel is SNPS versus CDNS, the two giants of engineering and design software, and the answer to that question is what separates the modern EDA trade from a headline.

The card. Both start at 100 paper points on last year's final close (calendar 2026, both on Nasdaq, same dollar). Total return decides the winner in twelve months; neither pays a dividend, so total return is price return here. Opening odds gave Cadence the 55/45 edge on growth quality, with Synopsys's valuation discount as the spoiler. No substitutions, no rebalancing, score on official closes, and the ledger is frozen. Everything below is a score update, not a rewritten thesis.

Synopsys opens the race looking dominant.

Synopsys's fiscal-third-quarter revenue rose roughly 42% year over year to $2.477 billion, and it raised full-year guidance to a $9.715 billion midpoint. That is a growth number most software companies never touch. If that is the whole story, Cadence's ~19% guided growth looks like the tortoise in the matchup.

But scoring a race and explaining a race are different jobs, and this is where the two scoreboards split.

The catch: most of that 42% was bought, not earned.

In July 2025 Synopsys closed the $35 billion acquisition of Ansys, the simulation-and-analysis software leader — the largest deal ever in design software. Ansys joined the Design Automation segment, which is why that segment showed +52.7% growth in the quarter. Strip Ansys out of the picture and Synopsys's own EDA business grew just 8.5% year over year in the quarter, with design IP up roughly 11%. For the full year, Synopsys expects Ansys to contribute about $2.9 billion to $3.0 billion of its $9.715 billion — meaning the added company accounts for nearly all of the revenue growth.

So the "42% grower" turns out to be an ~8–11% grower that bought a ~$3 billion business. That is bigger, not faster.

Cadence, by contrast, is compounding what it already owns.

Cadence expects roughly 19% revenue growth this year, and it is all organic — no $30 billion acquisition in the rearview mirror. Second-quarter revenue rose 24%, with core EDA up 18%, semiconductor IP up over 40%, and system design and analysis up 37%. Its core franchise is growing at roughly double the rate of Synopsys's organic EDA core.

The mechanism board backs the scoreboard. Cadence carries an ~86% gross margin to Synopsys's ~73%, a ~45% non-GAAP operating margin to Synopsys's ~41%, and a return on invested capital near 15.7% against Synopsys's ~1.4%, the last figure crushed by the Ansys transaction's added capital and amortization. Synopsys's GAAP operating margin is only ~10% this year, because acquired-intangible amortization and integration costs sit on top of the business it bought. Cadence, with no giant deal to digest, holds ~28% on the same GAAP basis.

The market is not fooled — and that is the real debate.

Here is the part that makes the pair worth racing rather than just describing. Investors are not paying Cadence-like prices for Synopsys's headline growth. Synopsys trades at about 8.8x sales and 31.6x EV/EBITDA; Cadence trades at about 13.6x sales and 37.9x EV/EBITDA. Market caps are nearly identical — roughly $76 billion to $78 billion — so the gap is entirely about what the two dollars of revenue are worth. You are paying a large premium for Cadence's organic compounding, or a heavy discount for Synopsys's bought bigness. Both are bets; they are bets on different claims.

The partial score reflects that the crowd has already noticed the difference. Through eight and a half months, Cadence leads, 91.16 to 84.55 on the 100-point scale — both down this year, as the whole design-software complex repriced, but Synopsys down about 15% against Cadence's ~9%.

What this settles and what it does not.

The opening question has an answer: measured on the engine it already owns, Synopsys is growing slower than Cadence, not faster — the appearance of speed was the addition of Ansys. Buying scale can flatter a growth chart without making the underlying franchise compound faster, and that is the exact distinction a one-line revenue number hides.

That is a mechanism verdict, not a prediction of which stock finishes first. The reason a fair duel keeps them separate is that the cheap-bigness case is genuine: Synopsys now owns the leading simulation franchise at a discount to Cadence, and if integration goes well, today's low multiple is the option. Cadence's edge is that it does not need a turnaround to look good — the compounding is already visible in its own numbers.

Cadence leads with about three and a half months left. The mechanism board favors the leader, so the variable that flips this race is not Cadence's — it is execution inside Synopsys: whether Ansys revenue, about one-third of the total, converts into the margin and cross-sell the acquisition was priced for. Until the next checkpoint, the score is the score, and the lesson is the ledger: a growth rate is only as honest as the denominator it hides.