Synopsys (SNPS.O) provided a positive outlook for the first quarter, anticipating revenue that surpasses Wall Street projections due to the increasing demand for the company’s chip design software driven by the adoption of artificial intelligence (AI).
Following this announcement, shares of the Sunnyvale, California-based company climbed 1.9% in after-hours trading.
The revenue forecast for the upcoming quarter ranges between \(1.63 billion and \)1.66 billion, exceeding the average analyst estimate of $1.60 billion.
The surge in demand for faster and AI-compatible chips has elevated the market significance of electronic design automation (EDA) companies like Synopsys and Cadence Design System (CDNS.O), which offer essential tools for chip design.
Furthermore, the heightened focus on custom chip design by tech giants such as Microsoft (MSFT.O) and Alphabet (GOOGL.O) has further fueled this demand.
Synopsys plays a crucial role in supporting semiconductor manufacturers like Intel (INTC.O) and automotive companies like Mercedes-Benz (MBGn.DE) in developing cutting-edge chips and electronic control units for engines.
Recently, Synopsys collaborated with Microsoft (MSFT.O) to introduce a chip-design assistant aimed at identifying and rectifying bugs and errors in the early stages of development.
For the full fiscal year 2024, Synopsys anticipates revenue in the range of \(6.57 billion to \)6.63 billion.
The company’s projected adjusted earnings per share for the first quarter fall between \(3.40 and \)3.45, surpassing analysts’ expectations of $3.05 per share, as per LSEG data.
In the fourth quarter ending on Oct. 31, revenue surged to \(1.60 billion, surpassing analyst forecasts of \)1.59 billion, and also exceeded profit estimates for the quarter.
