Synopsys, Inc. (SNPS)

Over the past six months, Synopsys' stock price has experienced a decline of 12.7%. This underperformance has been attributed to a sluggish recovery in key markets, regulatory challenges, and trade tensions between the United States and China. In May 2025, Synopsys reported its second-quarter fiscal year 2025 results, with revenue surpassing analyst estimates, though GAAP earnings per diluted share slightly missed expectations. Following this earnings announcement, Synopsys received a letter from the Bureau of Industry and Security of the U.S. Department of Commerce informing them of new export restrictions related to China, leading the company to suspend its financial guidance for the third quarter and full fiscal year 2025. A significant ongoing event is Synopsys' proposed acquisition of Ansys for approximately $35 billion, with US FTC conditional approval granted in May 2025, but China's antitrust regulator has delayed its approval of the merger. Additionally, insider selling activity was noted in June 2025.

Synopsys operates on a time-based, recurring revenue model, with a significant portion of its revenue coming from Technology Subscription License (TSL) agreements. This recurring revenue model helps to smooth out demand fluctuations. Demand is driven by the semiconductor and electronics industries, with increasing complexity of chips and the growing prevalence of AI chips spurring demand for their EDA tools. Growth in technologies such as AI, machine learning, IoT, 5G, and automotive are expected to continue to drive demand for Synopsys' products and services.

Synopsys, Inc. is a global leader in silicon-to-systems design solutions, operating primarily within the Technology sector and the Software - Infrastructure industry. The company's core business revolves around providing electronic design automation (EDA) software, which engineers utilize to design and test integrated circuits (ICs). Synopsys is a market leader in the EDA industry. Its major products and services include EDA Tools, Semiconductor IP, and Software Security and Quality Solutions. Synopsys' solutions cater to semiconductor and electronics systems companies across various industries.

Synopsys is headquartered in Sunnyvale, California, and has a significant international presence with approximately 122 offices worldwide, supporting operations in the US and 29 other countries across North America, Europe, and Asia. In fiscal year 2024, the United States was Synopsys' largest revenue region, accounting for 44.71% of its total revenue. Other significant revenue contributors include China (16.15%), Korea, Republic of (12.62%), and Europe (10.03%).

Synopsys has maintained a strong brand reputation, receiving the Frost & Sullivan's 2025 Global Technology Innovation Leadership Award and engaging in key partnerships with Keysight Technologies, Broadcom, and Samsung Foundry. The US FTC granted conditional approval for its acquisition of Ansys. However, geopolitical factors, such as China's delayed approval of the Synopsys-Ansys merger and new US export restrictions related to China, pose potential challenges to its reputation and business operations.

Synopsys, Inc. has strong institutional backing, with institutions possessing a significant majority of the company's shares, ranging from approximately 88% to 89.51% of total shares outstanding. Major institutional owners include Vanguard Group Inc., BlackRock, Inc., and Capital World Investors. Individual investors own approximately 11% to 20.12% of the company's stock, while insiders hold a smaller percentage, typically under 1%.