Is SNPS a good stock to buy? We came across a bullish thesis on Synopsys, Inc. on MMMT Wealth’s Substack by Oliver | MMMT Wealth. In this article, we will summarize the bulls’ thesis on SNPS. Synopsys, Inc.’s share was trading at $438.45 as of April 15th. SNPS’s trailing and forward P/E were 64.28 and 28.99 respectively according to Yahoo Finance.
Synopsys, Inc. provides design IP solutions in the semiconductor and electronics industries. SNPS is a leading provider of electronic design automation (EDA) software, semiconductor intellectual property (IP), and software integrity solutions, operating in a highly concentrated duopoly alongside Cadence. The company benefits from a resilient and predictable business model, with the majority of revenue derived from recurring EDA software subscriptions, where customers like NVIDIA pay annual fees independent of end-chip demand.
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This structure provides strong visibility and stability, while the IP segment adds incremental growth driven by rising demand for energy-efficient chip designs. Synopsys is increasingly positioned at the center of the AI-driven semiconductor cycle through tools like Synopsys.ai, enabling customers to optimize performance and power efficiency for next-generation chips, particularly for edge devices such as wearables and smart cameras.
Financially, the company demonstrates strong execution with 15.1% revenue growth and industry-leading gross margins of 81.4%, reflecting its high-value software and IP offerings, while operating margins of 13.0% indicate further room for scalability.
Despite trading at 9.8x NTM EV/Revenue and 21.6x NTM EV/EBITDA, the premium valuation is supported by its durable competitive positioning, high-margin profile, and critical role in semiconductor innovation. As AI adoption accelerates and chip complexity increases, Synopsys is well positioned to sustain long-term growth, making it an attractive compounder with significant upside 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, high barriers to entry, strong customer retention, and its critical role in complex semiconductor and AI chip design. SNPS’s stock price has depreciated by approximately 17.48% since our coverage. Oliver | MMMT Wealth shares a similar view but emphasizes on recurring revenue stability, AI-driven tools, and margin strength.
Synopsys, Inc. is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 91 hedge fund portfolios held SNPS at the end of the fourth quarter which was 83 in the previous quarter. While we acknowledge the risk and potential of SNPS as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SNPS and that has 10,000% upside potential, check out our report about this cheapest AI stock.
Disclosure: None.
