Weakness in the IP Segment Weighed on Synopsys' (SNPS) Performance

Aristotle Funds, an investment advisor, released its “Growth Equity Fund” fourth-quarter 2025 investor letter. A copy of the letter can be downloaded here. U.S. equity markets reached new all-time highs in Q4 2025, with the S&P 500 Index rising 2.66% and the Bloomberg U.S. Aggregate Bond Index increasing by 1.10%. Within the Russell 1000 Growth Index, healthcare, communication services, and financials were the top-performing sectors, while utilities, real estate, and materials lagged. The U.S. economy showed resilience. However, consumer confidence deteriorated toward year-end, raising concerns about future spending and the labor market. Against this backdrop, the Aristotle Growth Equity Fund (Class I-2) returned 0.95%, underperforming the Russell 1000 Growth Index’s 1.12%. Poor security selection in the information technology and consumer discretionary sectors detracted from performance, while positive contributions from healthcare and industrials improved relative performance. In addition, please check the Fund’s top five holdings to know its best picks in 2025.

In its fourth-quarter 2025 investor letter, Aristotle Growth Equity Fund 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. On February 25, 2026, Synopsys, Inc. (NASDAQ:SNPS) stock closed at $449.17 per share. One-month return of Synopsys, Inc. (NASDAQ:SNPS) was -6.42%, and its shares lost 1.22% over the past 52 weeks. Synopsys, Inc. (NASDAQ:SNPS) has a market capitalization of $85.934 billion.

Aristotle Growth Equity Fund stated the following regarding Synopsys, Inc. (NASDAQ:SNPS) in its fourth quarter 2025 investor letter:

"We sold Synopsys, Inc. (NASDAQ:SNPS) following the disappointing recent quarterly earnings, which highlighted a lower revenue outlook for the business due to significant weakness in the internet protocol (IP) segment. We expect the business to take a number of quarters to realign resources and business objectives and see more attractive growth opportunities in the semiconductor space."

Synopsys, Inc. (NASDAQ:SNPS) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 91 hedge fund portfolios held Synopsys, Inc. (NASDAQ:SNPS) at the end of the fourth quarter, up from 83 in the previous quarter. In 2025, Synopsys, Inc. (NASDAQ:SNPS) generated total revenue of $7.05 billion, up approximately 15% from previous year. 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 a list of best software infrastructure stocks to buy according to hedge funds. In addition, please check out our hedge fund investor letters Q4 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.