Synopsys to Report Q2 Earnings: What's in Store for the Stock?

Synopsys SNPS is scheduled to report second-quarter fiscal 2025 results on May 28, after market close.

Synopsys expects non-GAAP earnings per share between $3.37 and $3.42. The Zacks Consensus Estimate for fiscal second-quarter earnings is pinned at $3.39 per share, which indicates an increase of 13% year over year. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar).

The company anticipates revenues between $1.585 billion and $1.615 billion for the fiscal second quarter. The Zacks Consensus Estimate is pegged at $1.60 billion, which suggests an increase of 10.10% 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 3.69%. 

Synopsys, Inc. Price and EPS Surprise

Synopsys, Inc. price-eps-surprise | Synopsys, Inc. Quote

Factors Influencing Synopsys’ Q2 Results

Synopsys’ fiscal second-quarter performance is likely to have benefited from robust demand in the AI and high-performance computing end markets. Strong momentum around Synopsys’ newly expanded hardware-assisted verification (HAV) portfolio is expected to have boosted top-line growth during the quarter to be reported. 

The launch of next-generation HAPS 200 prototyping systems and ZeBu 200 emulation systems, delivering up to 2x better performance compared to prior versions, has strengthened Synopsys’ leadership in HAV. Major customers, including AMD, ARM, NVIDIA and SiFive, have begun deploying these technologies, are likely to have contributed positively in the to-be-reported quarter.

The company’s advancement in agent AI is anticipated to have further supported second-quarter performance. By enabling engineers to task autonomous agents with executing complex workflows, Synopsys expects to unlock massive productivity gains across the industry. The continued adoption of Synopsys.ai across design implementation, verification, test, and analog tools is expected to have driven meaningful growth. 

Synopsys’ IP development for the global foundry ecosystem is also expected to contribute positively to the to-be-reported quarter results. Silicon success for PCIe 4.05 IP on Samsung’s SF8 process, targeting automotive, mobile, networking, and storage applications, as well as successful deployment of one-time programmable non-volatile memory IP on TSMC’s N4, N5, N6, and N7 nodes, is likely to have supported demand, particularly in security and encryption-related solutions.

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.

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.

Though SNPS currently carries a Zacks Rank #3, it has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With Favorable Combination

Dell Technologies DELL, Nutanix NTNX and Salesforce CRM are some stocks that have a favorable combination.

Dell Technologies has an Earnings ESP of +1.46% and a Zacks Rank #3 at present. DELL shares have lost 2.7% year to date. DELL is set to report its first-quarter fiscal 2026 results on May 29. You can see the complete list of today’s Zacks #1 Rank stocks here.

Nutanix has an Earnings ESP of +5.26% and a Zacks Rank #3 at present. NTNX shares have gained 30.3% year to date. NTNX is slated to report the third quarter of fiscal 2025 results on May 28.

Salesforce has an Earnings ESP of +0.76% and a Zacks Rank #3 at present. CRM shares have plunged 18.3% year to date. CRM is slated to report its first-quarter fiscal 2026 results on May 28.

 

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

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