Synopsys (SNPS) Valuation After NVIDIA’s $2 Billion Strategic Stake and Upgraded Growth Outlook
Synopsys (SNPS) just landed a multiyear strategic partnership with NVIDIA that comes with a $2 billion equity stake, instantly reframing the story around the stock and its longer term growth potential.
See our latest analysis for Synopsys.
The NVIDIA deal helped arrest a tough slide after lawsuits and a Q3 guidance shock. The 1 month share price return was 16.2%, even as the 1 year total shareholder return remains negative and longer term gains stay intact.
If this kind of AI hardware software pairing interests you, it is worth scanning high growth tech and AI stocks for other names quietly building momentum before the crowd notices.
With Synopsys still trading below fresh analyst targets despite Nvidia’s endorsement and a recovering growth story, investors face a familiar dilemma: is this post sell off rebound the start of a bargain entry, or is future upside already priced in?
Most Popular Narrative Narrative: 15.5% Undervalued
With Synopsys last closing at $465.85 against a narrative fair value near $551, the market is treating this rebound as cautious, not euphoric.
The accelerating complexity and proliferation of AI, high performance computing, and multi die/chiplet based architectures are increasing customer demand for Synopsys' advanced design, verification, and simulation solutions, solidifying its role as a mission critical partner in next generation chip and system development supporting both revenue growth and opportunities for higher margin recurring licensing.
Curious how robust growth, margin expansion, and richer recurring revenue streams could justify a premium future earnings multiple, yet still screen as undervalued? The underlying narrative stitches together ambitious revenue trajectories, steady profit lift, and a bold valuation framework that many investors have not fully unpacked. Want to see the exact earnings and multiple assumptions driving that gap between today’s price and the projected fair value? Dive into the full narrative to see what the numbers are really implying.
Result: Fair Value of $551.04 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, lingering export restrictions to China and ongoing weakness in the IP segment could delay the expected margin recovery and challenge today’s undervaluation case.
Find out about the key risks to this Synopsys narrative.
Another Way to Look at Value
Multiples tell a very different story. Synopsys trades on a 76.1x price to earnings ratio, well above the US software sector at 32.7x and a fair ratio closer to 43.4x. That premium suggests real valuation risk if growth or sentiment slip. So what is the market really paying for?
See what the numbers say about this price — find out in our valuation breakdown.
Build Your Own Synopsys Narrative
If you see the story differently or want to stress test every assumption yourself, spin up a custom narrative in minutes and Do it your way.
A great starting point for your Synopsys research is our analysis highlighting 1 key reward and 2 important warning signs that could impact your investment decision.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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