Cadence Design Systems, Inc. CDNS will release results for the fourth quarter of 2025 on Feb. 17.
The Zacks Consensus Estimate for fourth-quarter earnings has been unchanged in the past 60 days at $1.90 per share. The consensus mark implies an increase of 1.1% from the year-ago actual. The Zacks Consensus Estimate for revenues is pegged at $1.42 billion, indicating a nearly 5% uptick from the year-ago actual.
Management expects revenues to be $1.405-$1.435 billion for the fourth quarter. Revenues were $1.356 billion in the year-ago quarter. Non-GAAP EPS is anticipated to be between $1.88 and $1.94 compared with $1.88 in the year-ago quarter. Non-GAAP operating margin is estimated to be between 44.5% and 45.5% in the fourth quarter.
Revenues for 2025 are now estimated to be in the range of $5.262-$5.292 billion, while non-GAAP EPS for 2025 is expected to be between $7.02 and $7.08. Non-GAAP operating margin for 2025 is forecasted to be in the range of 43.9% to 44.9%.
Cadence has an impressive earnings surprise history. The company’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with an average surprise of 5.4%.
Price Performance
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CDNS stock has gained 1.5% in the past year against the Computer-Software industry’s decline of 10.4%. The S&P 500 composite and the Zacks Computer and Technology sector have risen 18.2% and 14.1%, respectively, in the same time frame.
Factors Shaping CDNS’ Q4 Results
Ongoing uncertainty prevailing over global macroeconomic conditions, especially U.S.-China tech tensions, along with stiff competition in the EDA space and inflation, remains a concern ahead of the fourth-quarter earnings.
Nonetheless, AI has been driving a major transformation in semiconductor and system design and Cadence is deeply integrated into this shift. Design activity across several verticals, especially data centers, drones, robotics and automotive, has been robust, due to AI, hyperscale computing and 5G. The focus on Generative AI, Agentic AI and Physical AI has been leading to an exponential increase in computing demand and semiconductor innovation.
Customers have been significantly increasing their R&D budgets in AI-driven automation and the Cadence portfolio, comprising EDA, IP, 3D-IC, PCB and system analysis solutions, is likely to have aided in capitalizing on the opportunity presented by the AI super cycle. Cadence.AI’s portfolio is powered by autonomous silicon agents and built the JedAI platform using NVIDIA accelerated compute capacity.
Cadence’s ratable software model, strong backlog and high mix of recurring revenues are other positives. At the end of the third quarter, Cadence had a backlog of $7 billion and current-remaining performance obligations of $3.5 billion.
It has been collaborating with several tech giants, including Qualcomm and NVIDIA, on their next-generation AI designs across both training and inference. Expanding partnerships with its foundry partners like Samsung, Taiwan Semiconductor Manufacturing, Intel and Arm Holdings bodes well.
Taking a Look at Segments
Core electronic design automation (“EDA”) business (which constitutes Custom IC, Digital IC and Functional Verification businesses) is likely to have gained from demand for the new hardware systems, especially among AI, automotive and high-performance computing (“HPC”) clients.
Cerebrus AI Studio (an agentic AI multi-block and multi-user SoC design platform) and Millennium M2000 AI Supercomputer are likely to have witnessed steady traction as system companies continue to build their next-gen AI and agentic-AI products, amid increasing chip complexity. Momentum in the verification software suite (Virtuoso Studio, Spectre and Verisium SimAI) is expected to have acted as a tailwind in the to-be-reported quarter.
The System Design and Analysis division is likely to have gained from the increasing demand for BETA CAE solutions, AI-powered Allegro X, Clarity and Sigrity solutions. CDNS’ digital twin Reality datacenter product is likely to have gained traction with large hyperscalers and cloud service providers. In September, Cadence announced a major expansion of its Cadence Reality Digital Twin Platform with the addition of a digital twin of NVIDIA DGX SuperPOD with DGX GB200 systems.
Cadence Design Systems, Inc. Price and EPS Surprise
Cadence Design Systems, Inc. price-eps-surprise | Cadence Design Systems, Inc. Quote
In September 2025, the company also signed a definitive agreement to acquire the Design & Engineering division of Hexagon AB, including its renowned MSC Software business. The buyout will aid in accelerating footprint expansion in SDA and gain access to newer opportunities across automotive, aerospace, industrial and physical AI.
Increasing demand for solutions (PCIe, UCIe, DDR and HBM) in AI, foundry ecosystem buildout and chiplet use cases is likely to have cushioned the performance of the IP business division. Cadence’s acquisition of Arm’s Artisan foundation IP business (August 2025) strengthens the design IP portfolio, adding to its leadership in protocol, memory interface and SerDes IP at advanced nodes. Secure IC (October 2025) acquisition further expands its IP portfolio, including interface, memory, AI and DSP solutions.
In November, CDNS launched 10 Verification IP for key emerging interfaces for AI designs. These include UCIe 3.0, Ultra Accelerator Link (UALink), Ultra Ethernet (UEC), LPDDR6, AMBA CHI-H, Embedded USB v2 (eUSB2), and UniPro 3.0.
Key Recent Developments
On Feb. 10, 2026, Cadence launched the ChipStack AI Super Agent, the industry’s first agentic AI workflow purpose-built for front-end silicon design and verification. Designed to address the escalating complexity of modern chip architectures, the ChipStack AI Super Agent automates critical tasks across coding, testbench development, test plan creation, regression orchestration, debugging and automated issue resolution, delivering up to 10x productivity improvements in key engineering workflows. Cadence acquired Chipstack, which provides agentic AI solutions for chip verification, in November 2025.
On Jan 21, 2026, Cadence unveiled the Tensilica HiFi iQ DSP IP, the sixth-generation addition to its widely adopted HiFi DSP family, marking a significant step forward for next-generation voice AI and immersive audio applications. Built on a brand-new architecture, the HiFi iQ DSP is purpose-designed to address the rapidly rising computational and energy-efficiency demands of modern SoCs used in home entertainment systems, automotive infotainment, smartphones and other edge AI platforms.
Earnings Whispers for CDNS
Our proven model does not predict an earnings beat for Cadence this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here.
CDNS currently has a Zacks Rank #4 (Sell) and an Earnings ESP of -0.16%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Stocks to Consider
Here are a few other stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season.
Analog Devices, Inc ADI currently has an Earnings ESP of +1.57% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
ADI is scheduled to report quarterly earnings on Feb. 18. The Zacks Consensus Estimate for ADI’s to-be-reported quarter’s earnings and revenues is pegged at $2.30 per share and $3.12 billion, respectively. Shares of ADI have gained 57.1% in the past year.
Moody’s MCO has an Earnings ESP of +0.83% and a Zacks Rank #2 at present. MCO is scheduled to report quarterly figures on Feb. 18. The Zacks Consensus Estimate for MCO’s to-be-reported quarter’s earnings and revenues is pegged at $3.46 per share and $1.88 billion, respectively. Shares of MCO are down 18.4% in the past year.
Remitly Global RELY has an Earnings ESP of +80.00% and a Zacks Rank #2 at present. It is scheduled to report quarterly figures on Feb. 18. The Zacks Consensus Estimate for RELY’s to-be-reported quarter’s earnings and revenues is pegged at 2 cents per share and $427.5 million, respectively. Shares of RELY have declined 52.9% in the past year.
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