TL;DR:
- Synopsys, a crucial partner of Nvidia, has achieved a remarkable 3,594% gain since 2008.
- It shares the spotlight with Nvidia on various prestigious stock indices, boasting a Composite Rating of 99.
- Strong institutional demand for Synopsys reflects the surge in AI-related demand.
- Synopsys recently announced a $35 billion acquisition of Ansys to address AI megatrends.
- While Nvidia continues to perform well, Synopsys is crafting a second-stage cup with a buy point at 554.57.
- Both companies displayed resilience during a Nasdaq dip.
- Synopsys is set to face an earnings test on Feb. 21, following impressive results in previous quarters.
Main AI News:
Synopsys, the strategic partner of Nvidia, has been riding the AI megatrends wave, delivering an astounding 3,594% gain since 2008. It has even earned its place on the IBD Long-Term Leaders list, positioning itself for a potential entry into a new buy zone, contingent on market conditions.
Notably, Synopsys shares share the limelight with Nvidia on the IBD 50, IBD Big Cap 20, and the IBD Breakout Stocks Index, boasting the highest Composite Rating of 99, mirroring the strength of Nvidia. The surge in AI-related demand has fueled institutional interest in Synopsys, evident by the impressive B Accumulation/Distribution Rating. Furthermore, Synopsys counts among its shareholders 52 funds with an A+ rating from IBD.
While it may have missed a spot in the list of the top 100 stocks in 2023, Synopsys still delivered a commendable 65% gain during the year. Despite Nvidia surpassing its buy range, Synopsys is setting the stage for a potential breakout, marking itself as a prominent player in the AI landscape.
Synopsys, headquartered in Sunnyvale, California, specializes in software and systems designed for simulating and verifying semiconductor designs and prototypes. Their offerings encompass software for self-driving vehicles, machine learning, and the essential communications and data transfer infrastructure for cloud-based applications.
In addition to its collaboration with Nvidia, Synopsys collaborates with major players in the semiconductor industry, including Taiwan Semiconductor, Arm Holdings, Intel, Samsung, and more. Recently, they announced their acquisition of Ansys, a company focused on engineering simulation software applications for design analysis and prototype evaluation. This strategic move aims to address the burgeoning megatrends in AI, silicon proliferation, and increasingly complex software-defined systems, with the deal valued at approximately $35 billion.
While Nvidia’s stock maintains its impressive performance with its relative strength line soaring and surpassing the 600 mark, Synopsys is crafting a second-stage cup with a handle, establishing a buy point at 554.57. Observing its recent price action, it’s evident that Synopsys has garnered substantial demand, with several up days in heavy volume during the formation of the right side of its base. Despite a temporary dip as the Nasdaq pulled back, Synopsys remains above its 50-day moving average.
Both Synopsys and Nvidia displayed resilience, bouncing back from intraday lows, while the Nasdaq experienced a notable 2% decline in above-average and rising volume. The upcoming earnings test for Synopsys is slated for Feb. 21.
Synopsys reached record highs after exceeding estimates for its fiscal fourth quarter on Nov. 29. Marking a second consecutive quarter of accelerating growth, Synopsys reported earnings of $3.17 per share, reflecting a remarkable 66% increase compared to the prior-year quarter. Revenue also surged by 25%, reaching just under $1.6 billion, marking a third consecutive quarter of accelerating growth.
As analysts forecast a 39% earnings growth for the current quarter, Synopsys stock appears poised for an 83% gain for the full year, solidifying its position as a formidable force in the AI arena.
Conclusion:
Synopsys’ remarkable growth, strategic acquisitions, and strong positioning in the AI landscape, coupled with the continued success of Nvidia, indicate a burgeoning market for AI-related technologies. As both companies thrive, they contribute to the overall expansion and evolution of AI solutions in various industries. Investors should keep a close watch on these market leaders and the broader AI market trends.
