[ad_1]
Investors may want to keep an eye on a chip design stock that is poised to benefit from ongoing artificial intelligence tailwinds, according to Bank of America. Analyst Vivek Arya reiterated his buy rating and lifted estimates on Synopsys in a report on Thursday, citing ongoing electronic design automation momentum and a steady AI product ramp. SNPS YTD mountain Shares over the last year “Overall, we believe SNPS remains a key beneficiary of rising semi complexity led by AI and increased chip design activity by an expanding set of customers,” he wrote. Shares of the semiconductor stock have added 28% over the past year, outperforming the S & P 500 by half a percentage point, as Wall Street stepped up bets on potential AI winners. Arya expects Synopsys’ core business to see low double-digit growth through 2025 as companies allocate more research and development dollars to semiconductor spending. Shares should also gain from a “healthy” $7.9 billion backlog as chip design starts to accelerate and AI products roll out. “AI products (VSO.ai) introduce another monetization lever which is delivering a +20% uplift to contracts where adoption remains in early days,” he added. Arya reiterated his $650 price objective, implying 15% upside from Wednesday’s close, and raised revenue estimates for 2025 and 2026 by 5% and 6%, respectively. Operating profit margins should also expand to 40% by the second half of 2025. Arya added that closure of the company’s $35 billion deal to buy graphics software maker Ansys could unlock a $31 billion total addressable market and $400 million in “potential revenue synergies.”
[ad_2]
Source link
