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    AI Revenue Growth Could Change The Case For Synopsys Stock

    Simply Wall St·10/22/2026 18:38:08
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    • Morgan Stanley recently argued that Synopsys is undervalued, pointing to the company’s AI focused electronic design automation tools and newer consumption based software model as key business drivers the market may be underappreciating.
    • The interesting angle is how Synopsys’ push into AI driven design flows and usage linked contracts could gradually reshape its revenue mix and earnings visibility beyond traditional up front licenses.
    • We will now explore how Synopsys’ push into AI focused EDA and a consumption based model might reshape the broader investment narrative.

    Scan how Synopsys’ AI EDA story compares with other potential breakouts across 55 AI infrastructure stocks that are leaning into similar compute and chip design tailwinds.

    Synopsys Investment Narrative Recap

    For an investor to own Synopsys, the belief has to be that AI focused EDA, Ansys simulation and higher value IP can support healthier earnings power over time, even as the revenue mix changes toward subscriptions and usage. The recent Morgan Stanley call mainly reinforces that thesis around AI and consumption based contracts rather than altering it.

    The more immediate swing factor is still execution on the Ansys integration and cost actions, where restructuring, amortization and a 10% headcount cut are already pressuring margins. The biggest risk remains that IP growth stays muted and cost synergies arrive slowly, in which case the current premium P/E and rich expectations become harder to justify.

    The Ansys acquisition and integration story is the clearest operational anchor for this latest Synopsys AI revenue debate. Management has outlined roughly US$2.98b of expected FY26 Ansys contribution and about US$711m in Q3 FY26, which gives investors hard numbers to track as they judge whether broader silicon to systems ambitions are translating into real scale.

    Viewed next to Morgan Stanley’s argument that Synopsys is undervalued, the Ansys data points tie directly into the catalyst that matters most, cross selling simulation into existing EDA relationships while absorbing restructuring noise. If those Ansys related cost synergies and portfolio changes stall, the risk side of the story, from lower near term margins to class action and index removal overhangs, stays front of mind for anyone considering the stock.

    Synopsys' current analyst set up points to revenue of US$13.6b and earnings of US$2.6b by 2029. This projection rests on 13.1% yearly top line growth and an increase in profit from US$1.1b today to that US$2.6b level, roughly 2.4x higher than current earnings.

    Uncover why Synopsys' fair value indicates a 29% potential upside to its current price, which could narrow quickly.

    NasdaqGS:SNPS 1-Year Stock Price Chart
    NasdaqGS:SNPS 1-Year Stock Price Chart

    Exploring Other Perspectives

    The two fair value estimates from the Simply Wall St Community cluster tightly between about US$581.79 and US$583.99, which shows how closely some retail investors are thinking about Synopsys right now. You still need to weigh that against unresolved Ansys integration costs and index removal, which could influence how the story develops.

    Explore another Synopsys fair value estimate, including one that suggests as much as 29% upside from the current price.

    The Verdict Is Yours

    Don't just follow the ticker; dig into the data and build a conviction that's truly your own.

    Looking for more investment ideas beyond Synopsys?

    If the Synopsys story has sharpened your thinking but you want a wider watchlist, the Simply Wall St Screener can help you spot other opportunities that fit different risk and return preferences.