Cadence (CDNS) Stock Jumps 4.8%: Will It Continue to Soar?

Cadence Design Systems CDNS shares rallied 4.8% in the last trading session to close at $354.7. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 3% loss over the past four weeks.

The performance is influenced by the growing clout of CDNS in the EDA space amid the AI boom. The company's product portfolio is rapidly gaining adoption as secular trends like 5G, increased use of hyperscale computing, and autonomous driving influence design activities across semiconductor and systems companies. The focus on Generative AI, Agentic AI, and Physical AI is leading to an exponential rise in computing demand and semiconductor innovation. This bodes well for Cadence.

To capitalize on this opportunity, it has been collaborating with several tech giants, including Qualcomm and NVIDIA. Recently, it announced a major expansion of its Cadence Reality Digital Twin Platform with the addition of a digital twin of NVIDIA DGX SuperPOD with DGX GB 200 systems. This new model of NVIDIA’s advanced accelerated computing platform enables data center designers and operators to seamlessly integrate one of the world's leading AI accelerators into the development of next-generation AI factories.

To support growth, it remains focused on inorganic expansion. In September 2025, CDNS signed a definitive agreement to acquire the Design & Engineering (D&E) division of Hexagon AB, including its renowned MSC Software business, an industry pioneer in engineering simulation and analysis. The € 2. 7 billion deal, structured with 70% cash and 30% Cadence common stock, marks a significant step in advancing Cadence's Intelligent System Design strategy. Pending regulatory approvals and usual closing conditions, the transaction is expected to close in the first quarter of 2026.

By integrating Hexagon' s proven technology and expertise, Cadence will strengthen its System Design & Analysis portfolio and expand its presence in the multi-billion-dollar structural analysis market, building on its earlier acquisition of Beta CAE in 2024.   

Driven by strong results and a healthy pipeline for the second half, management has upgraded its outlook for 2025. Revenues for 2025 are now estimated to be in the range of $5.21-$5.27 billion compared with $5.15-$5.23 billion guided earlier. 

This maker of hardware and software products for validating chip designs is expected to post quarterly earnings of $1.79 per share in its upcoming report, which represents a year-over-year change of +9.2%. Revenues are expected to be $1.32 billion, up 9% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Cadence, the consensus EPS estimate for the quarter has been revised marginally higher over the last 30 days to the current level. And a positive trend in earnings estimate revision usually translates into price appreciation. So, make sure to keep an eye on CDNS going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Cadence is a member of the Zacks Computer - Software industry. One other stock in the same industry, Commvault Systems CVLT, finished the last trading session 2.5% higher at $180.94. CVLT has returned -7.8% over the past month.

For Commvault, the consensus EPS estimate for the upcoming report has remained unchanged over the past month at $0.95. This represents a change of +14.5% from what the company reported a year ago. Commvault currently has a Zacks Rank of #3 (Hold).

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This article originally published on Zacks Investment Research (zacks.com).

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