Synopsys (SNPS) saw its stock surge dramatically over two days following the announcement of major partnerships with OpenAI and Amazon, alongside optimistic long-term financial targets at its investor day. The stock rose nearly 5% on Wednesday and an additional 11% on Thursday, making it the top performer in the Nasdaq 100 on the second day.
The first key deal is with OpenAI: the two companies are launching GPT-Synopsys, a specialized AI model for chip design. Built using Synopsys' electronic design automation tools and OpenAI's frontier intelligence, it will operate under a multiyear revenue-sharing agreement. Exact financial terms were not disclosed, but Synopsys noted it is already in discussions with major semiconductor customers about adopting the tool.
The second partnership is with Amazon, a multi-year agreement worth more than $1 billion. Amazon will expand its use of Synopsys software and intellectual property for custom silicon development and cloud infrastructure. The deal introduces a license-plus-royalty model, meaning payments should scale with production volumes. Synopsys is also adopting Amazon's cloud storage and Bedrock AI platform to enhance its own tools.
During its investor day, Synopsys raised its long-term revenue growth target to mid-teens compound annual rate through fiscal 2030, up from a previous double-digit goal. For fiscal 2027, it projects revenue of $11.15 billion (about 15% growth), non-GAAP EPS of $19.04 to $19.12, and an operating margin near 44%. The company also announced a $1 billion stock buyback plan.
Wall Street analysts remain bullish: consensus rating is a Strong Buy with an average price target of $566.75 (implying about 30% upside). Rosenblatt raised its target to $620, while HSBC set a street-high $700 target. CFO Shelagh Glaser dismissed AI disruption fears, stating, "Everybody's building their own chips, and we have insatiable demand." The company attributed earlier stock weakness to the integration of Ansys (acquired for $35 billion) and AI concerns, but the new deals are seen as proof of a successful transition.
