Synopsys to Report Q1 Earnings: What's in the Cards for the Stock?

Synopsys SNPS is scheduled to report first-quarter fiscal 2026 results on Feb. 25, after market close.

Synopsys expects non-GAAP earnings per share between $3.52 and $3.58. The Zacks Consensus Estimate for fiscal first-quarter earnings is pinned at $3.57 per share, which indicates a year-over-year increase of 17.8%.

The company anticipates revenues between $2.365 billion and $2.415 billion for the fiscal first quarter. The Zacks Consensus Estimate is pegged at $2.39 billion, which suggests a rise of 64.3% from the year-ago period's reported figure.

In the trailing four quarters, SNPS’ earnings surpassed the Zacks Consensus Estimate thrice while missing the same on one occasion, with an average surprise of 2.1%.

Factors Influencing Synopsys’ Q1 Results

Synopsys is gaining from the multi-trillion-dollar AI infrastructure expansion, which is driving complex AI semiconductor demand and driving the need for advanced design tools. The increasing traction in Synopsys’ Intellectual Property (IP) solutions is likely to have continued in the to-be-reported quarter.

In the previous quarter, SNPS announced that it had 5,000 active users among tier-1 semiconductor customers who are using Synopsys.ai tools. Increased adoption of Synopsys.ai among chip manufacturers and vendors is anticipated to have boosted top-line growth during the reported quarter.

The increasing use of AI, IoT, 5G and cloud technology is likely to have driven demand for Synopsys’ solutions in the to-be-reported quarter. Robust design investments in Synopsys’ ARC processors by automotive companies, as well as the strong adoption of security solutions for interfaces like CXL, PCI Express and DDR, are likely to aid its first-quarter results.

Given its strong portfolio, SNPS is likely to have gained from the strong bookings momentum and revenue visibility in the to-be-reported quarter. The acquisition of Ansys has already enabled Synopsys to bridge digital and physical design, creating cross-sell potential that is likely to have driven SNPS’ top-line growth in the fiscal first quarter.

However, tightening budgets among corporations due to ongoing macroeconomic challenges and unfavorable currency exchange rates are expected to have partially offset the positive impacts of the growth drivers. SNPS is also struggling in Chinese markets, which might have posed an investor concern in the to-be-reported quarter.

What Our Model Says About SNPS

Our proven model does not conclusively predict an earnings beat for SNPS this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, that’s not the case here.

SNPS has an Earnings ESP of 0.00% and carries a Zacks Rank #4 (Sell) at present. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are some companies worth considering, as our model shows that these have the right combination of elements to beat on earnings in their upcoming releases:

Credo Technology Group CRDO has an Earnings ESP of +3.54% and sports a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Credo Technology Group is set to report third-quarter fiscal 2026 results on March 2. The Zacks Consensus Estimate for the third-quarter earnings is pegged at 96 cents per share, revised upward by 18 cents over the past 30 days. Estimates for Credo Technology Group’s EPS for the third quarter indicate a year-over-year increase of 284%.

MongoDB MDB is set to report fourth-quarter fiscal 2026 results on March 2. The stock has an Earnings ESP of +0.05% and presently sports a Zacks Rank #1.

The Zacks Consensus Estimate for MongoDB’s fourth-quarter earnings has remained unchanged at $1.47 per share over the past 60 days. The consensus estimate for MongoDB’s EPS for the fourth quarter implies a year-over-year increase of 14.8%.

Snowflake SNOW is set to report fourth-quarter fiscal 2026 results on Feb. 25. The stock has an Earnings ESP of +0.57% and presently carries a Zacks Rank #3.

The Zacks Consensus Estimate for Snowflake’s fourth-quarter earnings is pegged at 27 cents per share, which has been revised a penny upward over the past 60 days. Estimates for Snowflake’s fourth-quarter EPS suggest a year-over-year decline of 10%.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Zacks Investment Research