Synopsys Boosts Annual Forecasts on Soaring AI Chip Demand

The surge in artificial intelligence development is significantly boosting demand for advanced semiconductor systems, prompting chip design software provider Synopsys to raise its annual revenue and profit forecasts. The company anticipates substantial growth as chipmakers and tech giants like Amazon and Alphabet invest heavily in creating more sophisticated chips.

Synopsys now expects fiscal year 2026 revenue to range between $9.69 billion and $9.74 billion, surpassing the $9.68 billion estimated by analysts. This upward revision reflects a robust performance, particularly in its design intellectual property (IP) business, which saw a return to year-over-year revenue growth in the third fiscal quarter ending July 31.

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The growth is really underpinned by the strong design environment we're seeing, and the main thing driving it is AI.

CFO Shelagh Glaser attributed this growth to a "strong design environment" primarily driven by AI. "Customers are building more and more complex chips and in shorter time frames. And we offer the tools for them to simplify that complexity," Glaser explained in an interview. The company projects a continued sequential increase in its design IP business for the current quarter.

Furthermore, Synopsys has improved its outlook for annual adjusted earnings per share, now forecasting between $15.04 and $15.10, up from its previous projection of $14.72 to $14.80. This revised forecast exceeds the analyst consensus of $14.76 per share. In the third quarter, Synopsys reported revenue of $2.48 billion and adjusted earnings per share of $3.91, both exceeding market expectations. Despite the positive financial outlook, the company's shares experienced a slight decline of about 2% in extended trading.

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Customers are building more and more complex chips and in shorter time frames. And we offer the tools for them to simplify that complexity.