Synopsys Lands Billion-Dollar Amazon and OpenAI Deals, Lifts FY27 Outlook

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.

Cadence Design Systems and Analog Devices announced a collaboration on September 15 to integrate Cadence's Tensilica DSP architecture into ADI's latest generation of SHARC automotive audio processors, aiming to enhance in-vehicle infotainment with advanced digital signal processing. For Cadence, the partnership strengthens its IP business, a segment that grew over 40% year-over-year in Q2 2026, and adds to its record $8.1 billion backlog, underpinning a raised 2026 outlook projecting 19% revenue growth of $6.26B to $6.34B and $2 billion in operating cash flow. For Analog Devices, the deal expands its addressable edge-processing market and follows Q3 2026 revenue of $4.02 billion, trailing twelve-month free cash flow of $4.9 billion, or 36% of revenue, and $1.7 billion returned to shareholders in Q3 alone. Both companies face risks: Cadence must sustain operational spending on domain-specific processors while navigating export-control regulations, and ADI remains exposed to auto production cycles, working-capital needs and long automotive qualification timelines.