Synopsys revenue forecast beats estimates on AI chip boom, shares up

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By Stephen Nellis and Kritika Lamba

(Reuters) -Synopsys on Wednesday forecast second-quarter revenue above Wall Street estimates, citing growing demand for its software used in designing chips.

The company’s shares rose 2.45% to $482 in after-hours trading after the results were released.

Companies such as Amazon, Google and Apple are investing in designing their own chips, as are carmakers and other businesses, helping drive demand for Synopsys’ software.

The company sees second-quarter revenue between $1.59 billion and $1.62 billion, the midpoint of which is slightly above analysts’ estimates of $1.60 billion, according to data compiled by LSEG.

On an adjusted basis, the company sees per-share earnings to be between $3.37 and $3.42 for the second quarter, compared with analysts’ estimates of $3.35.

Synopsys, which partners with chip companies such as Nvidia, Qualcomm and Intel, provides software and hardware used for designing advanced processors.

Synopsys Chief Executive Sassine Ghazi told Reuters that while some sectors of the chip industry such as automotive chips remain depressed, the company is still seeing strong demand from customers designing AI chips.

Ghazi said that more companies have started to design chips for inference, which is when trained AI models are put to work, such as when chatbots provide answers.

“It’s a good thing, because the more inference you have, the more chips you’re going to have, and the more types of chips you’re going to have, and we benefit from it,” Ghazi said.

Synopsys is also closing its $35 billion deal to acquire engineering software firm Ansys , which was approved in the EU last month. Ghazi said Synopsys has started to engage in talks with Chinese regulators about the deal.

“We’ve had very active engagements with them in the last few weeks, since the signals came officially from Europe and the UK,” Ghazi said. “The engagements at this point, I want to say that they’re very collaborative. They’re no different than other agencies in the type of engagements we’ve had with them, and we still feel positive that we’re marching towards a first half (2025) close.”

Revenue from the company’s design automation unit — its largest segment, which includes digital and custom integrated circuit design software — was $1.02 billion in the first quarter.

Synopsys posted revenue of $1.46 billion, slightly below analysts’ estimates of $1.47 billion for the first quarter.

(Reporting by Stephen Nellis in San Francisco and Kritika Lamba in Bengaluru; Editing by Mohammed Safi Shamsi and David Gregorio)