1 Prediction for Synopsys in 2026

Synopsys (NASDAQ: SNPS) stock is down 19.5% year to date. However, several positive factors could help its price bounce back next year.

The company's core offering is electronic design automation (EDA) software, which assists chip designers in researching and developing chips. It also has a design intellectual property (IP) segment that provides pre-designed IP blocks, which engineers can use as components of their own chip designs.

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Two key events happened this year. First, Synopsys completed its acquisition of engineering simulation software company, Ansys. The deal expands Ansys' customer base and enables Synopsys to offer a "silicon to systems" ecosystem, allowing designers to use Synopsys' EDA software to design chips and then test those designs using Ansys' engineering software.

The integration of Ansys is still in its early days, but as management recently reaffirmed its Q4 financial targets, it appears to be going well.

Second, the smaller design IP segment (which provides 20% of revenue in the new Synopsys) was impacted by waning demand from China, as customers reacted negatively to restrictions on U.S. technology exports, including Synopsys' design IP. Additionally, a slowdown at an undisclosed key foundry partner, possibly Intel, cut into the company's revenue expectations.

Why Synopsys can recover

• Management will continue to integrate Ansys and begin building on the considerable opportunity to drive growth in its core EDA business.
• Intel is a longtime strategic partner of Synopsys, and the positive news flow regarding its foundry business since this summer could lead to significant tailwinds for the design IP business.
• While demand from China-based customers might not return swiftly, it could improve if U.S.-China trade relations do.
• Management announced a restructuring plan under which it will reduce its global workforce by 10% (with a $300 million to $350 million charge) following the acquisition of Ansys, which could to lead to future cost reductions.

Synopsys will deliver its fiscal 2025 fourth-quarter results on Dec. 10. If the report indicates good progress on the Ansys integration in EDA and a brighter outlook for design IP, then Synopsys could be positioned for a strong 2026.

Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Intel. The Motley Fool recommends the following options: short November 2025 $21 puts on Intel. The Motley Fool has a disclosure policy.