Synopsys SNPS recently expanded its agreement with Arm Holdings Plc (ARM), a British semiconductor and software design company, to provide optimized internet protocol (IP) and Electronic Design Automation (“EDA”) solutions for the newest Arm technology. The new technologies will include the Arm Neoverse V2 platform and the Arm Neoverse Compute Subsystem (“CSS”).
Under this collaboration, Synopsys has joined Arm Total Design, a critical ecosystem built by Arm to facilitate the frictionless delivery of custom system-on-chips (SoCs) based on Neoverse CSS. The ecosystem brings together industry leaders — IP vendors, EDA tool providers, ASIC design houses, foundries and firmware developers — to simplify and accelerate the creation of Neoverse CSS-based systems.
Within the Arm Total Design ecosystem, Synopsys will leverage the Synopsys.ai full-stack AI-driven EDA suite and Synopsys Interface, Security and Silicon Lifecycle Management IP services to facilitate mutual customers to accelerate the development of their Arm Neoverse CSS-based solutions.
The newly expanded collaboration further extends the two companies’ three-decade-old relationship to facilitate mutual customers to develop specialized silicon quickly and at a lower cost with lesser risks and faster timer to market.
Shares of Synopsys have outperformed the Zacks Computer – Software industry in the year-to-date (YTD) period. While SNPS stock has rallied 54.1% YTD, the Computer – Software industry has risen 38.7%.
Synopsys, Inc. Price and Consensus 
Synopsys, Inc. price-consensus-chart | Synopsys, Inc. Quote
Design Wins Drive Revenue Growth
Synopsys has been benefiting from strong design wins due to a robust product portfolio. The company’s penetration into new and growing AI chip companies is a major growth driver. With the increasing need for enhanced security measures, considering the rising security threats in interconnected systems laden with software, the demand for SNPS’ solutions is shooting up. Robust growth in software-based verification at traditional semiconductor and emerging system companies focused on their in-house design is an upside.
In June 2023, Synopsys expanded its agreement with Samsung Foundry to develop a broad portfolio of intellectual property (IP), which will lower design risks and accelerate silicon success for automotive, mobile, high-performance computing and multi-die designs.
In May, the company signed an agreement with the Massachusetts-based Software Supply Chain Security (“SSCS”) platform provider, ReversingLabs. Per the deal, Synopsys is now authorized to resell ReversingLabs’ SSCS Platform with its Software Integrity Group’s Black Duck solution.
In April, SNPS reinforced its collaboration with Taiwan Semiconductor Manufacturer Company and Ansys for the design and manufacture of multi-die systems, which integrate heterogeneous dies in a single package, providing a path for designers to efficiently deliver innovative products with unprecedented functionality. By reusing proven dies, designers reduce risks, accelerate time to market and rapidly create new product variants with optimized system power and performance.
In the third quarter of fiscal 2023, the Synopsys EDA and Design IP segments’ revenues soared 22.2% and 11.9%, respectively, on a year-over-year basis. Total revenues jumped 19% year over year to $1.49 billion in the last quarter. For the fourth quarter of fiscal 2023, the Zacks Consensus Estimate for revenues is pegged at $1.58 billion, which suggests an increase of 23.3%.
Zacks Rank & Other Stocks to Consider
Currently, Synopsys carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks from the broader technology sector are Palo Alto Networks PANW, Salesforce CRM and Twilio TWLO. Palo Alto sports a Zacks Rank #1, while Salesforce and Twilio each carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Palo Alto Networks' first-quarter fiscal 2024 earnings has been revised upward by 6 cents to $1.16 per share in the past 60 days. For fiscal 2024, earnings estimates have increased by 39 cents to $5.34 per share in the past 60 days.
Palo Alto Networks’ earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 22.2%. Shares of PANW have surged 87.6% YTD.
The Zacks Consensus Estimate for Salesforce’s third-quarter fiscal 2024 earnings has revised 23 cents northward to $2.06 per share in the past 60 days. For fiscal 2024, earnings estimates have moved 8.3% upward to $8.06 per share in the past 60 days.
Salesforce’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 14.2%. Shares of CRM have risen 58.3% YTD.
The Zacks Consensus Estimate for Twilio's third-quarter 2023 earnings has been revised upward by a penny to 35 cents per share in the past 60 days. For 2023, earnings estimates have increased by 3 cents to $1.70 per share in the past 60 days.
Twilio’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 149.1%. Shares of TWLO have rallied 18.7% YTD.
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