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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.