EDA & Semiconductor IP

Amazon.com announced a multi-year agreement worth over US$1.00 billion with Synopsys to bolster its custom chip design for AI and cloud computing, and separately signed a 20-year nuclear power deal with Constellation to secure 690 megawatts of electricity from Maryland's Calvert Cliffs plant. The two moves pair in-house silicon development with long-term, low-carbon power access, reinforcing the infrastructure backbone behind Amazon's expanding AI and cloud services. The chip deal and the nuclear agreement look material for AWS's near-term capacity buildout, though the immediate stock catalyst still centers on how quickly those AI investments flow through to earnings against the risk that AWS capital intensity and competition compress segment margins. The developments come as Amazon commits over US$220 billion of annual spending into AI and cloud infrastructure, alongside a proposed US$309.5 million settlement of the Amazon Return Policy class action. Amazon's narrative projects $1152.4 billion revenue and $158.3 billion earnings by 2029, with a $327.00 fair value implying 32% upside to its current price.

Synopsys unveiled a $1 billion multi-year deal with Amazon and a multi-year agreement with OpenAI, sending its shares up 12.78 percent on Thursday to close at $490.54 apiece. The Amazon agreement expands Synopsys' silicon IP business, with Amazon as its lead customer, and the two will also collaborate on applying AI across silicon-to-system engineering workflows. The OpenAI deal covers development and delivery of the GPT-Synopsys model for chip design, combining OpenAI's frontier AI with Synopsys' EDA tools, under a revenue-sharing arrangement and go-to-market collaboration. The deals bolstered Synopsys' revenue growth outlook for fiscal year 2027, with the company targeting revenues between $11 billion and $11.2 billion, an implied increase of 13 percent to 15 percent from the $9.715 billion midpoint target for full fiscal year 2026, and non-GAAP earnings per share of $19.04 to $19.12 versus $15.07 guidance for the year earlier. Analysts raised price targets after the news, including Deutsche Bank to $640 from $590, Rosenblatt to $620 from $570, KeyBanc to $605 from $600, and Bank of America to $600 from $500.

Synopsys announced partnerships with OpenAI and Amazon at its investor day, positioning the chip designer as a major player in the AI boom. CEO Sassine Ghazi said the OpenAI partnership combines frontier intelligence and reasoning with Synopsys's domain-specific tools to help chip designers achieve better performance, power, and reliability faster. On the Amazon side, Ghazi said the company committed a billion dollars for next-generation chips to use Synopsys's new application optimized IP, a new business category aimed at the custom silicon market. Amazon is the lead customer for that emerging business, but Ghazi said Synopsys signed a number of other contracts as well, without naming them. He noted that companies like Amazon, Google, Microsoft, and Meta are all building their own chips, driving demand for Synopsys software and interface IP that connects chips to each other and to systems.

Synopsys has been rated Zacks Rank #2 (Buy), with the consensus estimate for the current quarter standing at $4.10 per share, a year-over-year change of +41.4%, though that figure has moved -1.9% over the last 30 days. For the current fiscal year, the consensus earnings estimate of $15.13 indicates a year-over-year change of +17.2% and has changed -0.5% over the last 30 days, while the next fiscal year's estimate of $17.43 points to a change of +15.2% and has edged up +0.1% over the past month. On the revenue side, the consensus sales estimate of $2.56 billion for the current quarter points to a year-over-year change of +13.5%, with estimates of $9.72 billion and $10.74 billion for the current and next fiscal years indicating changes of +37.8% and +10.5%, respectively. In its last reported quarter, Synopsys posted revenues of $2.48 billion, up +42.4% year over year, and EPS of $3.91 versus $3.39 a year earlier, beating the Zacks Consensus Estimate of $2.44 billion by +1.68% on revenue and by +6.54% on EPS, and the company has topped consensus EPS and revenue estimates in each of the trailing four quarters. Synopsys is graded D on the Zacks Value Style Score, indicating it trades at a premium to its peers.

Taiwan Semiconductor Manufacturing expanded its chip design partnership with Synopsys, strengthening the tools customers can use to design chips for TSMC's upcoming A14 process. The September 23 announcement covers AI-assisted design, automated chiplet layouts, power analysis for advanced packaging and verification for co-packaged optics, and Synopsys also reported progress on interfaces for HBM4, PCIe 7.0 and Ethernet. TSMC has scheduled A14 volume production for 2028. The U.S.-listed shares fell about 0.9% to $446.57 at 11.48am ET on September 28, a level 22.79% above the $363.69 GF Value. Better design tools could help customers get chips ready sooner, but they do not guarantee orders, and investors still need to see customer designs reach production, strong yields and fabs running at capacity.

Nvidia on the 28th released a suite of safety software for artificial intelligence agents. One of the tools, OpenShell, uses hardware features in Nvidia-made CPUs to keep agents confined within isolated environments, and the company is working with Arm Holdings and Intel to make it run on their CPUs as well. Another system, Sentry, combines a different Nvidia semiconductor with OpenShell to block out-of-control agents from trying to escape containers on the CPU. Justin Boitano, who heads enterprise computing, said the tools could have prevented the attack on Hugging Face made public this summer, and that the company will roll them out with dozens of partners, including Anthropic. Hugging Face was hit by an attack from a swarm of rogue OpenAI agents, and a few months later Nvidia acquired it for 13 billion dollars.

BNP Paribas analyst Andrew DeGasperi upgraded Synopsys to Neutral from Underperform with a $420 price target, citing easing headwinds and more limited downside risk. The company's Design IP business returned to year-over-year growth in the third quarter of fiscal 2026, and Synopsys posted third-quarter revenue of $2.477 billion, up from $1.740 billion a year earlier, prompting management to raise its fiscal 2026 revenue outlook to approximately $9.715 billion at the midpoint. Management expects approximately $2.98 billion of Ansys revenue in fiscal 2026 and has targeted $400 million of cumulative annual synergies by the fourth year following the acquisition. Synopsys has been expanding agentic AI capabilities, including autonomous workflows developed with partners such as Microsoft and Advanced Micro Devices, with early evaluations reportedly cutting design cycle times by approximately 25% to 40%. Hedge fund positioning was relatively stable, with 85 funds holding stakes in the second quarter versus 84 in the first, while short interest rose to approximately 5.71 million shares as of August 31 from 4.36 million as of July 31, or about 2.98% of shares outstanding.

HSBC upgraded Synopsys to Buy from Hold and raised its price target to a Street-high $700 from $490, sending the chip design software company's shares up 1.81% intraday as of 10:20 a.m. ET. The new target implies over 60% upside from current levels and is based on 35 times HSBC's fiscal 2027 earnings-per-share estimate of $20.01, rolled forward from 33 times fiscal 2026. That estimate sits 13% above consensus and is the highest on Wall Street, according to the firm. HSBC expects Synopsys' shift toward a royalties-based business model to drive earnings growth, and sees agentic AI lifting demand for electronic design automation tools. The call follows a strong fiscal third quarter in which Synopsys earned $3.91 a share on a non-GAAP basis on revenue of $2.48 billion, beating estimates of $3.67 and $2.44 billion, and raised its full-year outlook.

Synopsys reported third-quarter fiscal 2026 non-GAAP earnings of $3.91 per share, up 15.3% year over year and ahead of the Zacks Consensus Estimate by 6.5%, while revenues rose 42.4% to $2.48 billion. The company raised its fiscal 2026 revenue guidance to $9.69-$9.74 billion, with the midpoint up $50 million, and lifted its fiscal 2026 non-GAAP earnings guidance to $15.04-$15.10 per share, a 31-cent increase at the midpoint. Ansys contributed approximately $711 million to total quarterly revenues and is now expected to contribute about $2.98 billion for the full fiscal year, up $20 million from the previous outlook. Backlog stood at $10.9 billion, and the non-GAAP operating margin was 41.6%, with fiscal 2026 non-GAAP operating margin now projected at about 41.5% at the midpoint, up 50 basis points. For the fourth quarter, Synopsys projects revenues of $2.53-$2.58 billion and non-GAAP earnings of $4.10-$4.16 per share, with management expecting EDA revenue growth to accelerate to double digits.

Cadence Design Systems introduced its RTL Generation Agent, extending the ChipStack AI Super Agent platform for chip design automation. The new agent automates front-end digital design and verification, turning natural language prompts into optimized RTL code for power, performance, and area. Early evaluations, including work with Honda on advanced automotive projects, report strong productivity and efficiency gains from the AI-assisted workflows. The launch pushes Cadence's agentic AI thesis further into front-end design, expanding ChipStack from checking designs to writing and refining them, and connects to earlier moves such as the GUC AI accelerator work and the InnoStack alliance with Rapidus. Cadence's AI-driven design and verification tools, including the Cadence Cerebrus AI solution and SimAI, are expected to drive future revenue growth as adoption increases.

Synopsys announced new collaborations with TSMC spanning A14 design enablement, AI-assisted engineering workflows, CoWoS support for multi-die designs, and unified multiphysics signoff. The companies said Synopsys has achieved A14 certification across digital and analog flows and enabled agentic AI capabilities, giving customers a methodology spanning implementation through signoff to accelerate design convergence on TSMC A14 technology. In analog design, Synopsys is collaborating with TSMC on device routing enablement on A14, a key milestone for advanced analog place-and-route automation. Synopsys said its 3DIC Compiler platform now enables designers to co-design and simulate integrated voltage regulators on TSMC CoWoS technology in a unified environment, and that it continues to work with TSMC on co-packaged optics design on TSMC COUPE technology. On TSMC's N2P process, Synopsys achieved key IP enablement and tape-out milestones for AI and HPC designs including PCIe 7.0, HBM4, LPDDR6/5X/5, 224G Ethernet PHY, UCIe, OTP, and advanced SLM process, voltage, and temperature monitoring IP, and recently completed 64G UCIe IP tape-outs on both 2nm and 3nm process nodes.

Arm Holdings reported more than $2 billion in customer demand for its AGI CPU across fiscal 2027 and 2028, a move that takes the chip architecture company beyond licensing designs and collecting royalties when partners ship processors. The AGI CPU gives Arm a chance to sell a finished product, bringing a different set of manufacturing and delivery demands, and customer interest is only a start, with shipped chips and reported revenue to show what the opportunity is worth. Shares of Arm fell 1.24% to $329.06 Wednesday morning, trading 69.5% above the GF Value of $194.14, a gap that puts the focus on execution. The AGI CPU has to deliver meaningful sales alongside Arm's established royalty business for today's valuation to hold up.

Stifel reiterated a Buy rating and a $350 price target on Marvell Technology after meeting with executives at the ECOC 2026 optical communications conference in Malaga, Spain. Marvell told the firm it expects to sample 2nm products at the end of 2026, with production ramping in the second half of 2027 across PAM4 and coherent and coherent-lite modulation. Management argued that securing 2nm capacity, not just access to the node, is what sets it apart, and Stifel flagged pluggable optical modules as potentially underappreciated, with unit volume expectations rising across scale-up, scale-out and scale-across networks. Separately, Marvell has expanded its silicon-germanium capacity with GlobalFoundries to support its lead in transimpedance amplifiers, and management sees its XPU Attach business, the components that connect to custom AI processors, as a potentially bigger opportunity than the processor market itself, a case it may lay out at its October 6 Investor Day. Marvell shares were down 0.58% in premarket.

24/7 Wall St. issued a buy recommendation on Synopsys with a $490.29 price target, about 27.36% above the recent quote of $400.70, citing AI-driven chip design complexity. The firm reported 90% confidence in the call even as Synopsys shares have fallen 14.69% year to date and 16.54% over the past year, within a 52-week range of $362.55 to $539.48. In Q3 FY2026, Synopsys revenue reached $2.48 billion, up 42.4% year over year, and non-GAAP EPS came in at $3.91 versus $3.67 consensus, while management raised full-year revenue guidance to $9.69 billion to $9.74 billion and non-GAAP EPS guidance to $15.04 to $15.10. CEO Sassine Ghazi said AI is driving unprecedented complexity and increasing demand for silicon IP and engineering solutions, and the company logged more than 30 full-flow technical wins in a single quarter with agentic EDA being evaluated by 20 customers across more than 25 specialized AI agents. Synopsys carries an $11 billion backlog, the Ansys deal carries a reiterated $400 million revenue synergy target, and long-term debt jumped to $13.46 billion after Ansys, with GAAP profitability compressed by roughly $404 million per quarter of intangible amortization. Synopsys trades at roughly 28x forward earnings versus 30x for Cadence Design Systems, which has a $77.9 billion market cap and an analyst target of $402.12, while Broadcom trades at 19x forward earnings with a $1.71 trillion market cap and 85.5% quarterly revenue growth. The Street's average analyst target sits at $545.93, and the September 30 Investor Day could confirm Ansys synergy timing and agentic EDA monetization.

Arm Holdings shares rose 17% to $323 after CEO Rene Haas told CNBC that demand for the company's technology was off the charts and that he is increasingly convinced Arm can surpass its $2 billion revenue target for its developing AGI CPU business. That goal has moved quickly: Arm began in March with an initial target of $1 billion, raised it to $2 billion in May, and by September Haas said the pipeline was above that level. Nvidia's Vera CPU, Google's Axion, Amazon's Graviton5, and Microsoft's Azure Cobalt all use Arm-based computation, tying the company to the expanding trend of CPUs paired with AI accelerators. Haas also pointed to supply restrictions on wafers, substrates and testing capacity that could take years to work through, a problem that nonetheless shows demand is outstripping available capacity. The larger story is Arm's effort to move away from its usual licensing arrangement and capture more value from the chips themselves, and Monday's surge suggests investors are increasingly focused on that opportunity.

Asset Plus Fund Management assesses that the rally in technology stocks and the massive investment in AI infrastructure still show no clear sign of entering bubble territory. Kamolyot Sukhumsuwan, Chief Investment Officer, said such concerns are reasonable given the rapid rise in share prices and the accelerating investment by hyperscalers in data centers, semiconductors, and artificial intelligence infrastructure, pushing capital expenditure budgets to record highs. However, any assessment should look at demand across the entire supply chain rather than share prices or the size of CapEx alone. Upstream, ASML reported sales of 9.3 billion euros, beating market expectations, and raised its full-year revenue target, with nearly all of its order book already secured for 2027. TSMC, meanwhile, posted revenue of 40.2 billion US dollars, up 33% from a year earlier, with its High Performance Computing business accounting for 66% of total revenue, and raised its 2026 capital expenditure budget to 60 to 64 billion US dollars. In memory, Micron said its HBM production capacity for 2026 is fully booked under long-term contracts, while SK Hynix has begun mass shipments of HBM4 and has long-term agreements with several customers. On the conversion of orders into revenue, NVIDIA reported revenue of 96.2 billion US dollars in its latest quarter, up 106% from a year earlier, with Data Center revenue at 89.0 billion US dollars, while Broadcom posted revenue of 29.6 billion US dollars, up 86%, with AI chip revenue up 221% to 16.7 billion US dollars. The key issue to watch next is how well this enormous wave of investment will generate adequate returns, since CapEx is starting to pressure cash flow and financing costs remain high. AI Infrastructure and AI Labs, which rely heavily on external funding, carry more risk than hyperscalers with strong financial positions. Asset Plus Fund Management still sees AI as a key long-term investment trend, but investors should focus on the quality of growth and choose companies that can sustainably turn AI opportunities into earnings.

Marvell Technology unveiled three 2-nanometer optical technologies aimed at easing one of AI infrastructure's biggest pressure points: moving more data through increasingly crowded networks. The lineup stretches from 400-gigabit-per-second-per-lane PAM4 technology built for 3.2-terabit connectivity to an 800-gigabit ZR/ZR+ pluggable with integrated MACsec encryption and 1.6-terabit coherent links spanning data-center connections. Marvell is also showing a 102.4-terabit-per-second co-packaged-optics platform among 38 demonstrations at ECOC. Shares climbed approximately 3.4% to $252.39 Monday, a level 109.07% above the $120.72 GF Value. The company's latest quarter produced $2.739 billion of revenue, up 37%, while data-center sales jumped 46%, though the next test is execution through customer design wins, production schedules, shipment volumes and margins.

Meta Platforms launched Muse, an autonomous personal AI agent that shot to the top of the Apple App Store within a week, and the agentic AI shift is driving gains for Arm Holdings and Advanced Micro Devices. In March, Meta and Arm announced a large-scale partnership to co-develop Arm AGI CPU and multiple generations of specialized silicon for Meta's data centers, and Arm CEO Rene Haas said Arm already has $2 billion of customer demand for its new AGI CPU. SoftBank, which owns roughly 90% of Arm's shares outstanding, said it would raise Arm's loan facility to $25 billion from $20 billion, and Arm shares rose more than 10% in early trading. Meta partnered with AMD to optimize Muse Glimmer, an open-source model designed to run locally on computers, and demand for agentic AI has pushed prices for AMD server chips up about 40%. AMD CEO Lisa Su said the server CPU market could exceed $120 billion by the end of the decade, a 35% CAGR, and AMD shares broke out to all-time highs as the company crossed the $1 trillion market cap landmark for the first time.

Marvell Technology announced industry-first 2nm optical interconnect demonstrations that advance next-generation AI data center connectivity, to be showcased at the European Conference on Optical Communication (ECOC) 2026, held September 20-24, 2026, in Málaga, Spain. The demos include the first 2nm 400G/lane optical PAM4 demonstration, the first live demonstration of 2nm 800G ZR/ZR+ with MACsec powered by the Marvell Libra 2nm coherent DSP, and the first 2nm 1.6T ZR and coherent-lite O-band demonstrations powered by next-generation Marvell DSPs announced earlier this year. Marvell will also present its 102.4T co-packaged optics platform, which integrates optics directly with AI accelerators and switch silicon and is demonstrated at 102.4 Tbps with 200G-per-lane silicon photonics. The company said the technologies build on a multi-generational history of industry firsts, including the first 5nm 200G/lane 1.6T Marvell Nova DSPs in 2023, the 3nm 1.6T Ara platform in 2024 and the 2nm 800G Libra DSPs announced earlier this year. Marvell will showcase 38 advanced technology demos at Booth #2002, spanning 224G SerDes and 1.6T optics to coherent interconnects and optical memory fabrics, and executives including Xi Wang, senior vice president and general manager of the Connectivity Business Unit, will participate in presentations and panels.

Marvell Technology and GlobalFoundries have expanded their multi-year agreement to increase production capacity for silicon germanium, or SiGe, at GlobalFoundries' facility in Burlington, Vermont, sending Marvell shares up more than 4% and GlobalFoundries shares up more than 6% on September 17. SiGe is a semiconductor technology used in high-speed optical connections for data centers, allowing devices to operate at higher speeds while using less energy. Robb Johnson, Vice President of Foundry Technology at Marvell, said the expanded collaboration will help ensure the company has the SiGe technology and manufacturing capacity to support the significant growth it expects ahead, and the added capacity will help Marvell meet growing demand for optical networking products including pluggable optical transceivers, near-packaged optics, and co-packaged optics. GlobalFoundries reported $1.786 billion in revenue for the second quarter of 2026, up 6% year over year, with its communications infrastructure and data center segment accounting for about 16% of total revenue and growing 20% sequentially and 62% year over year, and CEO Tim Breen said demand for SiGe remains strong and the company is oversubscribed throughout 2027. Marvell reported record net revenue of $2.739 billion in the second quarter of fiscal 2027, up 37% year over year, and Chairman and CEO Matt Murphy said AI-related bookings remain exceptionally robust as the company raised its revenue outlook for fiscal 2027 and fiscal 2028.

Jim Cramer said selling Arm Holdings early was a "big mistake," noting on the September 16 episode of Mad Money that the stock has fallen 46% from its June high of $452 to just under $244. Arm's fiscal first quarter 2027 results showed total revenue of $1.29 billion, up 22% year over year, with royalty revenue up 22% to $715 million and licensing revenue up 23% to $574 million, while data-center royalties more than doubled and the company posted a non-GAAP operating margin of 41% and $665 million in non-GAAP free cash flow. Management expects Q2 FY27 revenue of $1.38 billion with a $50 million margin of error, non-GAAP operating expenses of about $780 million, and non-GAAP fully diluted earnings per share of $0.47 with a $0.04 margin of error, with results due by November 4. The stock trades at around 110x forward earnings, and short interest stood at 11.52% of the public float as of August 31, while 52 hedge fund portfolios held a stake in the second quarter, up from 46 in the prior period. Cramer argued that panicking over steep pullbacks in dominant tech leaders is a losing game, calling short-term drops buying opportunities for patient investors given Arm's royalty growth and tight supply.

Marvell Technology's data center business reached a record $2.17 billion in the second quarter of fiscal 2027, up 46% year over year and 18% sequentially, and accounted for 79% of total company revenues. The data center end market made up 74% of Marvell's fiscal 2026 revenues, and the company expects data center revenues to grow approximately 60% in fiscal 2027. Marvell reported strong demand for 800G optical DSPs while its 1.6T products ramp rapidly, and scale-out switching is expected to more than double in fiscal 2027 on broader adoption of its 51.2T switch products. The company expects its custom business to accelerate in the second half of fiscal 2027 and more than double year over year in fiscal 2028, driven by XPU and XPU-attach solutions, with an expanded hyperscaler agreement covering AI inference accelerators, storage controllers, network interface controllers, memory interface controllers and near-memory compute. Marvell also expanded its position in next-generation AI infrastructure through its relationship with NVIDIA, including NVLink Fusion, scale-up switching and silicon photonics, and introduced products such as the 102.4 Tbps Teralynx T100 switch. Marvell shares have gained 170.3% year to date, and the Zacks Consensus Estimate for fiscal 2027 earnings suggests year-over-year growth of 48%.

Generac struck a deal with Amazon to supply backup power generators for its data centers, sending the generator maker's shares up 33% in premarket trading. Initial deliveries are expected to total $2.4 billion between 2027 and 2028, and Generac also granted Amazon the right to buy up to $340 million worth of its stock; Amazon shares rose 1.3%. Lennar fell 1.2% after reporting third-quarter earnings of $1.19 per share, short of the $1.28 expected by analysts polled by FactSet and nearly half of what it saw this time last year, with revenue of $8.05 billion versus the $8.23 billion consensus estimate. Fluence Energy tumbled 22% after cutting its full-year guidance to $2.4 billion in revenue for 2026 from a prior range of $2.9 billion to $3.1 billion, and now anticipates a $200 million loss before interest, taxes, depreciation and amortization versus its previous guidance range of a $30 million loss to $10 million EBITDA. Nike rose 1.5% after announcing the appointment of Alexandre Arnault, Deputy CEO of LVMH's Moët Hennessy, to its board, and Arm Holdings gained roughly 4% after CEO Rene Haas told CNBC's Jim Cramer he is increasingly confident the company can meet demand for its new data center chip.

China has unveiled a new five-year development plan for manufacturing in electronics- and information technology-related industries, setting a target to raise revenue above 30 trillion yuan, or 4.5 trillion dollars, by 2030. The plan was drawn up jointly by the Ministry of Industry and Information Technology, or MIIT, and the National Development and Reform Commission, or NDRC. It covers the strategic framework from 2026 to 2030 and reflects the Chinese government's push for supply chain self-reliance, aiming for global leadership in strategically important emerging technologies from artificial intelligence to advanced computing, amid ongoing global competition. Beyond the revenue target, China also aims to raise research and development investment in the industry to 3.5% by 2030, setting out 17 missions covering nine key industry groups, from electronic components and materials, specialised manufacturing and measurement equipment, photonics, advanced computing, consumer electronics, power electronics, positioning and timing information technology, chips and AI endpoint devices, through to industrial electronics. The plan also drives technology development in the integrated circuit industry supply chain, while upgrading advanced electronic materials and smart sensors. In computing and memory, China will develop high-bandwidth flash memory alongside new forms of storage products such as Ferroelectric RAM, Resistive RAM and Magnetoresistive RAM, and aims to build very large-scale intelligent computing infrastructure supporting AI clusters equipped with hundreds of thousands of accelerator cards, while accelerating the deployment of space computing technology. The announcement of this sector-specific plan follows China's release on September 7 of its 15th five-year development plan for the information and communications industry, drawn up by the Ministry of Industry and Information Technology.