Synopsys (SNPS) shares jumped 13% on Thursday after the chip-design software maker issued fiscal 2027 revenue and profit forecasts above analysts’ expectations and announced multi-year agreements with OpenAI and Amazon Web Services.
The company outlined its long-term growth targets at its 2026 Investor Day in New York, highlighting demand for chip-design and simulation tools as artificial intelligence investment drives increasingly complex semiconductor development.
Synopsys raises fiscal 2027 outlook
Synopsys expects fiscal 2027 revenue of between $11.1 billion and $11.2 billion, above the $10.81 billion average analyst estimate compiled by LSEG.
Its forecast for earnings per share of $19.04 to $19.12 also exceeds the $17.81 consensus estimate.
The company is targeting roughly 15% compound annual revenue growth between fiscal 2026 and 2030.
It expects its adjusted operating margin to reach about 44% in fiscal 2027 and approximately 50% by fiscal 2030.
Synopsys also expects non-GAAP earnings per share to grow at a mid-20% compound annual rate through fiscal 2030.
Within its business, the company forecasts electronic design automation revenue growth of at least 13% annually, simulation and analysis revenue growth of at least 10%, and Design IP growth of at least 17%.
Berenberg said the investor day “provided significantly more than the market expected,” according to a note to clients.
OpenAI and AWS deals support growth
The updated outlook came alongside new agreements with OpenAI and AWS.
Synopsys agreed to share revenue with OpenAI as part of a partnership to develop an AI model for chip-design work.
Amazon Web Services also signed a multi-year agreement worth more than $1 billion to license Synopsys’ chip-design intellectual property.
Deutsche Bank analyst Gianmarco P. Conti maintained a Buy rating on Synopsys and raised his price target to $640.
Conti said the Amazon and OpenAI agreements could support “higher segment growth floors, faster Ansys revenue synergy ramp, and a steeper operating-margin trajectory.”
Conti raised his fiscal 2030 revenue estimate for Synopsys to $15.87 billion from $15.15 billion.
Bank of America also raised its price target to $600 from $500 while maintaining a Buy rating.
Analyst Vivek Arya said Synopsys’ targets imply roughly 23% compound annual growth in pro forma EPS from fiscal 2026 through 2030.
KeyBanc raised its price target to $605 from $600 and maintained an Overweight rating, citing the fiscal 2027 guidance, higher long-term growth targets and planned margin expansion.
Synopsys plans $1 billion buyback
Synopsys expects free cash flow to grow at a mid-20% compound annual rate from fiscal 2026 through 2030.
After investing in the business, the company expects to return up to 50% of free cash flow to shareholders through share repurchases.
The company plans to buy back about $1 billion of its shares over the coming months, subject to market conditions.
Synopsys is also seeking to diversify its revenue beyond traditional software licensing through usage-based fees, customised products and royalties, according to Deutsche Bank.
The company’s updated framework comes as it positions its design and simulation portfolio around the expansion of digital and physical AI and the wider shift towards AI-powered engineering.
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