Loop Capital Remains Bullish on Synopsys Inc. (SNPS) on AI and EDA Tailwinds

Synopsys Inc. (NASDAQ:SNPS) is among the best software infrastructure stocks to buy according to hedge funds. On January 2, Loop Capital analyst Gary Mobley reiterated his Buy rating on Synopsys but raised his price target to $600 from $570, implying a 28% upside.

While Synopsys Inc. (NASDAQ:SNPS) has underperformed during the last year with 2%-3% returns, Mobley believes that the stock could benefit from the broad-based rally he is expecting in 2026, partially driven by growth acceleration in automotive and industrial semiconductors. He also believes that sentiment towards the stock improved recently after it announced a strategic partnership with Nvidia, and the latter purchased $2 billion of Synopsys stock.

The analyst also expects Synopsys to benefit from growth in the Electronic Design Automation or EDA market. He said,

We believe the EDA market is entering a new paradigm of growth with AI-enhanced EDA tools results in higher annual contract values once licensees renew.” Mobley further added, “A combination of China export controls and uneven recovery in the semiconductor industry has recently masked the long-term growth potential of the EDA industry. However, China mix is now relatively small, especially for SNPS.

Synopsys Inc. (NASDAQ:SNPS) is an American electronic design automation (EDA) company. It focuses on design and verification of silicon chips, electronic system-level design and verification, and reusable components.

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. This article is originally published at Insider Monkey.