Synopsys predicts strong second quarter for AI-powered chip design market

Synopsys predicts strong second quarter for AI-powered chip design market
Synopsys predicts strong second quarter for AI-powered chip design market

Synopsys forecasts second-quarter sales and profitability above Wall Street expectations, citing increased demand for its software for creating sophisticated and AI-compatible devices.

Synopsys estimated second-quarter sales and earnings above Wall Street projections on Wednesday, citing an increase in demand for its software for designing sophisticated and AI-compatible devices.

The Sunnyvale, California-based company’s shares rose more than 3% in extended trade.

The results came more than a month after Synopsys, the world’s largest maker of chip design software, announced plans to buy Ansys for $35 billion in cash and stock.

Synopsys, which collaborates with chipmakers such as Taiwan Semiconductor Manufacturing Co., Intel, and Samsung Electronics, expects second-quarter revenue to be between $1.56 billion and $1.59 billion, with the midpoint exceeding analysts’ average estimate of $1.55 billion, according to LSEG data.

The AI boom has increased demand for companies like Synopsys, whose electronic design automation (EDA) tools are utilized by chipmakers for custom semiconductor design in a variety of industries, including aerospace, automotive, and industrial.

Chip companies are investing substantially in research and design initiatives to create durable chips with creative designs, which is one of the most difficult undertakings because billions of transistors—tiny on-off switches—must be perfectly organized on a sheet of silicon only a few millimeters wide. It increases demand for Synopsys software despite the looming economic instability.

Synopsys expects adjusted earnings per share to range between $3.09 and $3.14 for the second quarter ended April 30, which is higher than the previous estimate of $3.02 per share.

The business reiterated its full-year revenue expectation but boosted its annual adjusted earnings per share forecast to $13.47 to $13.55, up from $13.33 to $13.41.

Revenue for the first quarter ending January 31 increased by nearly 21% to $1.65 billion, as expected. Excluding adjustments, it earned $3.56 per share, exceeding the estimate of $3.43.

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