Synopsys Inc. (SNPS) Expect a solid quarter, with an uptick to 2026 guidance

Equity Research 12 August 2026 | 4:03PM EDT

Synopsys Inc. (SNPS): Expect a solid quarter, with an uptick to 2026 guidance

Key stock expectations: We expect Synopsys to report a solid quarter with a James Schneider, Ph.D. | modest uptick to FY26 guidance, with investor focus on the impact of AI tool Goldman Sachs & Co. LLC features and pricing. Based on our conversations, we believe investor positioning Luya You has turned somewhat more positive in recent weeks given a positive earnings report | Goldman Sachs & Co. LLC from Cadence relative to its AI tool functionality. We continue to believe that Synopsys (and Cadence) are uniquely insulated against AI disruption and poised for Anmol Makkar | growth through multiple vectors across the semi industry, and we see tailwinds Goldman Sachs & Co. LLC stemming from the diffusion of custom chip design across a broader range of Khalil Fenina customers. We expect modest upside to 2Q results, with a modest uptick to FY26 | guidance as the company gains more visibility into its business momentum in 2H26, Goldman Sachs & Co. LLC

particularly in IP. We expect investors to focus on: (1) the rate and pace of recovery in IP revenue; (2) potential demand acceleration for core EDA software in custom chip design; (3) updates to cost and revenue synergies from the completed Ansys deal.

Setup heading into the print: Based on our conversations, we believe investor expectations have turned incrementally more constructive despite persistent concerns on AI’s potentially negative impact on software.

Our view on key metrics and our estimates: We maintain our estimates. We expect Synopsys to deliver revenue above the midpoint of its guidance range, and guide for high-single digit QoQ revenue growth, with solid trends in core EDA and recovering demand in IP. However, we still expect a slower recovery in the IP business with clearer signs of improvement likely to emerge in 2H26. For FY26/27, our non-GAAP EPS estimates are roughly in line with the Street (Visible Alpha), reflecting our expectation of dilution from Ansys through FY26, with meaningful longer-term accretion.

Items on the call that could move the stock: (1) IP business - We expect updated commentary on the recovery of the IP licensing business, specifically with respect to a recovery in China and execution on customized IP blocks; (2) EDA momentum - we expect Synopsys to provide updates on customer expansions and design wins; (3) Ansys synergies - commentary on the magnitude and timing of synergies remains pivotal, particularly relative to 2024 Investor Day targets.

Coming out of the print: We expect the stock debate to continue around the rate of core EDA growth, the rising impact of AI, and the magnitude and pace of synergy realization from Ansys.

Goldman Sachs does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. For Reg AC certification and other important disclosures, see the Disclosure Appendix, or go to Analysts employed by non-US affiliates are not registered/qualified as research analysts with FINRA in the U.S.

Goldman Sachs Synopsys Inc. (SNPS)

Exhibit 1: SNPS - Summary of GS vs. Street estimates FY3QE FY4QE FY2026E FY2027E Financials ($mn, except EPS) GS Street GS/Street GS Street GS/Street GS Street GS/Street GS Street GS/Street EDA 1,292 1,252 +3.2% 1,249 1,281 -2.5% 4,802 4,790 +0.3% 5,378 5,317 +1.1% Design IP 462 476 -3.1% 448 495 -9.5% 1,771 1,829 -3.2% 2,054 2,060 -0.3% Other 41 21 +89.6% 46 34 +35.4% 111 93 +19.6% 118 105 +12.2% Simulation & Analysis (Ansys) 665 694 -4.2% 780 747 +4.4% 2,983 2,974 +0.3% 3,332 3,295 +1.1% Total Revenue 2,459 2,443 +0.7% 2,523 2,555 -1.3% 9,667 9,690 -0.2% 10,882 10,768 +1.1% YoY 41.3% 11.9% 37.0% 12.6% Operating Margin - Non-GAAP (excl. SBC) 33.5% 40.3% -17.0% 40.2% 41.9% -4.2% 40.9% 40.9% +0.0% 44.4% 42.4% +4.7% EPS - Non-GAAP (excl. SBC) $3.68 $3.67 +0.2% $3.95 $4.00 -1.3% $14.75 $14.78 -0.2% $18.60 $17.41 +6.9%

Source: Company data, Visible…