What Makes Synopsys (SNPS) a High-Quality Business?

Aristotle Capital Management, LLC, an investment management company, released its “Value Equity Strategy” third-quarter 2025 investor letter. A copy of the letter can be downloaded here. The US equity market continued its rally in the third quarter, with the S&P 500 Index rising 8.12% during the quarter. Bonds also finished higher in the quarter, with the Bloomberg U.S. Aggregate Bond Index increasing 2.03%. The composite returned 4.33% gross of fees (3.82% net of fees) in the third quarter, compared to a 5.33% return of the Russell 1000 Value Index and an 8.12% return of the S&P 500 Index. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2025.

In its third-quarter 2025 investor letter, Aristotle Capital Value Equity 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 -9.21%, and its shares lost 13.63% of their value over the last 52 weeks. On October 15, 2025, Synopsys, Inc. (NASDAQ:SNPS) stock closed at $435.90 per share, with a market capitalization of $80.968 billion.

Aristotle Capital Value Equity Strategy stated the following regarding Synopsys, Inc. (NASDAQ:SNPS) in its third quarter 2025 investor letter:

"Founded in 1986 and headquartered in Mountain View, California, Synopsys, Inc. (NASDAQ:SNPS) is a global leader in electronic design automation (EDA) software and semiconductor IP—mission-critical tools used for chip design and verification. In 2025, the company expanded its capabilities through the acquisition of ANSYS, a leading engineering simulation portfolio and long-term holding in our Value Equity strategy. This acquisition was the primary driver behind Synopsys’ addition to the Value Equity strategy, as it meaningfully broadens the company’s reach from chip-level to system-level design, supporting innovation across industries such as semiconductors, automotive, aerospace and healthcare.

The company partners with leading chipmakers, foundries and system providers to address increasingly complex design challenges. Its end-to-end design platform—spanning logic design, physical implementation, system simulation and verification—is deeply embedded in customer workflows and benefits from high switching costs, reinforcing Synopsys’ position as a critical enabler of next-generation technology..." (Click here to read the full text)

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 the list of best American semiconductor stocks to invest in. Polen Focus Growth Strategy initiated a position in Synopsys, Inc. (NASDAQ:SNPS) during Q3 2025 as it aligns with the growth trends in democratization of chips. 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.