Synopsys, Inc. (NASDAQ:SNPS) is one of the AI stocks analysts are betting on. Wells Fargo revised its outlook on Synopsys on November 25, trimming the price target to $445 from $550 while maintaining an Equal Weight rating. The firm expects management to offer cautious fiscal 2026 guidance, around $9.7 billion in revenue and $14 in EPS, partly to reestablish credibility following the ANSS acquisition. While Synopsys continues to show solid fundamentals, including gross margins above 80% and the potential for low double-digit growth next year, Wells Fargo believes the stock is still trading at valuations that look stretched relative to its fair value.
A day earlier, Citi initiated coverage of Synopsys, Inc. with a Buy rating and a $580 price target. The research firm expects the company to benefit as the electronic design automation sector enters a phase of robust growth, driven by artificial intelligence. Citi analyst Kelsey Chia sees Synopsys, Inc. as a beneficiary, as it sits at the foundational software layer of the semiconductor value chain. Consequently, it expects it to capitalize on rising chip complexity amid expanding custom silicon programs at hyperscalers. Synopsys has delivered double-digit revenue growth, driven by time-based contracts that generate high recurring revenue.
While Synopsys trades at a wider-than-usual discount following missteps and reduced guidance owing to its exposure to China, Citi views it as a more compelling tactical opportunity. The integration of Ansys and a shift towards higher-margin EDA and simulation are expected to ease some of the underlying pressures.
Synopsys, Inc. (NASDAQ:SNPS) is a technology company that provides software and services for silicon-to-systems design, including electronic design automation (EDA) tools, silicon IP, and system verification and validation. It uses AI to enhance and accelerate the design of semiconductors and electronic systems. The company applies AI in its Synopsys.ai suite for electronic design automation (EDA).
While we acknowledge the potential of SNPS to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than SNPS and that has 100x upside potential, check out our report about this cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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