What Makes Synopsys (SNPS) a Great Business?

Polen Capital, an investment management company, released its “Polen Focus Growth Strategy” third-quarter 2025 investor letter. A copy of the letter can be downloaded here. The equity market continued its strong performance in the third quarter of 2025, driven by enthusiasm for generative AI and strength in the semiconductor sector. In the quarter, the focus shifted to positive economic surprises, fiscal policy optimism, and better-than-expected corporate earnings. In the quarter, the strategy returned 3.34% (gross) and 3.14% (net) compared to 10.51% for the Russell 1000 Growth Index and 8.12% for the S&P 500 Index. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its third-quarter 2025 investor letter, Polen Focus Growth Strategy highlighted stocks such as Synopsys, Inc. (NASDAQ:SNPS). Synopsys, Inc. (NASDAQ:SNPS) offers electronic design automation software products used to design and test integrated circuits. The one-month return of Synopsys, Inc. (NASDAQ:SNPS) was 5.17%, and its shares lost 13.44% of their value over the last 52 weeks. On October 13, 2025, Synopsys, Inc. (NASDAQ:SNPS) stock closed at $448.00 per share, with a market capitalization of $83.215 billion.

Polen Focus Growth Strategy stated the following regarding Synopsys, Inc. (NASDAQ:SNPS) in its third quarter 2025 investor letter:

"We opportunistically initiated a new position in Synopsys, Inc. (NASDAQ:SNPS) as well, who are a market leader in electronic design automation (EDA), notably utilized by semiconductor companies to design chips. They had an uncharacteristic miss on reported revenues during the quarter, stemming from what we believe to be temporary issues, that resulted in a ~35% decline in their share price. We opportunistically used that steep decrease to add what we believe is a great business to the portfolio, that is a direct beneficiary from the secular tailwinds of ‘the democratization of chips’ and Gen AI driven capex and who we anticipate will deliver mid-to high teens earnings growth over the long-term."

Synopsys, Inc. (NASDAQ:SNPS) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 66 hedge fund portfolios held Synopsys, Inc. (NASDAQ:SNPS) at the end of the second quarter, compared to 67 in the previous quarter. While we acknowledge the potential of Synopsys, Inc. (NASDAQ: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.

In another article, we covered Synopsys, Inc. (NASDAQ:SNPS) and shared Bristlemoon Global Fund's views on the company. In addition, please check out our hedge fund investor letters Q3 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.