Is Synopsys, Inc. (SNPS) A Good Stock To Buy Now?
Is SNPS a good stock to buy? We came across a bullish thesis on Synopsys, Inc. on Rijnberk InvestInsights’s Substack by Daan | InvestInsights. In this article, we will summarize the bulls’ thesis on SNPS. Synopsys, Inc.'s share was trading at $424.32 as of March 3rd. SNPS’s trailing and forward P/E were 65.18 and 29.41, respectively according to Yahoo Finance.
Synopsys, Inc. provides design IP solutions in the semiconductor and electronics industries. SNPS has reemerged as a compelling long-term opportunity following a sharp 37% post-Q3 sell-off, with fiscal Q4 results reaffirming the durability of its AI-driven investment thesis. The company beat both revenue and EPS expectations, reporting Q4 revenue of $2.25 billion and fiscal 2025 revenue of $7.05 billion.
While headline growth benefited from the Ansys acquisition, core operations declined modestly due to temporary headwinds in semiconductor IP, including China-related export restrictions and delayed ramps at Intel. IP revenue fell 21% YoY in Q4, reflecting both customer caution in China and an internal strategic shift toward higher-value subsystems and chiplets, which is temporarily weighing on growth but strengthens long-term positioning.
Importantly, these pressures were largely offset by continued strength in Synopsys’ core EDA franchise, which grew 8% in fiscal 2025 excluding Ansys. As AI accelerators push semiconductor complexity to 3nm and below, demand for mission-critical EDA and verification tools remains structurally robust.
Synopsys operates in a duopoly with Cadence Design Systems, giving it pricing power and deep customer entrenchment across AI chip designers, including leaders such as Nvidia. With a non-cancellable backlog of $11.4 billion, 36.5% operating margins, and $1.35 billion in free cash flow, the business demonstrates resilience despite short-term noise.
While share dilution and near-term IP weakness weigh on EPS, management expects margin expansion as Ansys synergies materialize and debt is rapidly reduced. With secular AI tailwinds, strengthening backlog, and improving 2026 guidance, Synopsys remains a high-quality “picks-and-shovels” beneficiary of semiconductor innovation, offering attractive long-term compounding potential.
Previously, we covered a bullish thesis on Synopsys, Inc. (SNPS) by The Equity Analyst in February 2025, which highlighted the company’s EDA dominance, semiconductor IP leadership, high barriers to entry, and strong recurring subscription model. SNPS's stock price has depreciated by 20.14% since our coverage. Daan | InvestInsights shares a similar view but emphasizes recent Q4 results, temporary IP headwinds, Ansys integration, and improving 2026 guidance as key catalysts for long-term growth.
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