#snps Community Insights & Market Sentiment

I think in this AI chip wave, there are still two companies that many retail investors have underestimated: $SNPS and $CDNS. You don’t have to bet on whether NVIDIA wins—whether it’s $INTCB , $AMDB , or $GOOGLB TPU at the end—but as long as everyone keeps building more complex chips, these two companies basically just get to collect fees.

What they do is called EDA (electronic design automation software). Now, an advanced AI chip can have hundreds of billions to even a thousand billion transistors. Relying on engineers to manually design it just isn’t realistic. From circuit design, verification, and power analysis, to chip layout and advanced packaging, almost everything goes through EDA. Put simply: TSMC is responsible for manufacturing the chip, while SNPS/CDNS help engineers “design” the chip first.

Last night,
#SNPS
the earnings report confirmed this logic: Q3 revenue was $2.477 billion, up 42% year over year, beating market expectations; adjusted EPS was $3.91, also ahead of expectations. The company again raised its full-year revenue guidance to about $9.715 billion. The CFO even said the current chip design environment is very strong, and the biggest driver is AI. Companies that used to mainly buy chips—Amazon, Google, and even Meta—have all started designing their own ASICs. The result is that it created a new batch of big EDA customers.

On the other side,
#CDNS
Q2 revenue was $1.584 billion, up about 24% year over year. Backlog has reached a record $8.1 billion. Core EDA revenue grew 18%, and the company also raised its full-year revenue growth outlook to 19%. Even more interesting: AI not only makes customers buy more #EDA —EDA itself has also started using AI. In the past, engineers might need weeks to optimize a chip’s layout, but now Agents can automatically run a large number of options. The more complex the chip, the more dependent customers become on these tools.

So I think EDA has a very comfortable investment thesis: when NVDA wins, they make money; when AMD plays catch-up, they make money; when Google and Amazon go all-in on self-designed ASICs, they still make money. The more intense the competition in AI chips, the faster the iteration cycles, and the more complex the advanced packaging, the more important EDA becomes. It’s a bit like during a gold rush—not betting on who digs up the last piece of gold, but controlling the tools and tollbooths that every gold prospector has to use.

If I had to rank them, I’d say it’s now
$CDNS> $SNPS

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