Electronic automation design (EDA) stock Synopsys (NASDAQ: SNPS) has been in a rut over the last several months. While EDA revenue growth remains strong, the firm’s intellectual property revenue is declining. This is partially due to struggles at one of Synopsys’s top semiconductor foundry customers, Intel (NASDAQ: INTC). Furthermore, the company gained approval for its $35 billion acquisition of Ansys, and the deal has been a near-term profitability headwind.
Still, reasons for optimism are far from bereft. Synopsys is one of the dominant players in EDA, a technology that is crucial for semiconductor design. The Ansys deal expands the company’s total addressable market from simply chips to full-system development. NVIDIA (NASDAQ: NVDA) also invested $2 billion in the firm, indicating confidence going forward.
