Synopsys, Inc. (SNPS): A Bull Case Theory

We came across a bullish thesis on Synopsys, Inc.  on X.com by ContrarianCurse. In this article, we will summarize the bulls’ thesis on SNPS. Synopsys, Inc. 's share was trading at $438.10 as of September 11th. SNPS’s trailing and forward P/E were 59.20 and 31.95 respectively according to Yahoo Finance.

Synopsys (SNPS) presents a compelling opportunity following the fund’s rotation out of Micron (MU). The stock has recently derated due to its announced acquisition of Ansys (ANSS) and the resulting higher leverage, but if the deal is completed, it will create an irreplaceable software asset with unmatched strategic positioning. Synopsys operates in a near-duopoly with Cadence, where market share is stable, pricing is rational, and the company delivers immense value through highly complex workflows that engineers rely on, creating extremely high switching costs. With over 30 years of experience embedding itself into customer roadmaps, Synopsys has proven to be an indispensable partner to the semiconductor industry.

Geopolitical risks, particularly around China, are manageable; any move to cut off access would represent a major escalation and is already at least partially reflected in valuations. The company’s competitive advantage lies squarely in its R&D, which is essential and not easily substitutable. As the last seats to go in any semiconductor project, Synopsys ensures its position remains central to the design process. Industry tailwinds also provide a strong backdrop: demand for more chips, greater customization, and a broader customer base all support growth. Despite this, Synopsys captures just ~2.2% of semiconductor industry revenue, a figure that has doubled over the past decade, underscoring its increasing importance against the backdrop of ballooning tape-out costs.

In sum, Synopsys offers a rare combination of irreplicable assets, entrenched customer relationships, structural industry tailwinds, and a durable moat, making the current valuation dislocation an attractive entry point with significant upside.

Previously we covered a bullish thesis on Synopsys, Inc. (SNPS) by The Equity Analyst in February 2025, which highlighted its dominance in EDA, expansion into semiconductor IP, and strong recurring revenues. The stock has depreciated ~17% since our coverage due to concerns around the Ansys acquisition and leverage. The thesis still stands, while ContrarianCurse shares a similar view but emphasizes the Ansys deal’s strategic upside.

Synopsys, Inc.  is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 66 hedge fund portfolios held SNPS at the end of the second quarter which was 67 in the previous quarter. While we acknowledge the potential of SNPS as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.