Synopsys shares soar due to strong growth outlook and deals with OpenAI and AWS

Reuters, October 1 - Chip design software manufacturer Synopsys SNPS.O saw its shares surge 10% on Thursday after the company forecast that revenue and profit for fiscal year 2027 would exceed analyst expectations, and announced partnership agreements with OpenAI and Amazon Web Services (AWS).

At an investor day event held in New York on Wednesday, the company outlined its long-term growth prospects, emphasizing that major investments in artificial intelligence are driving increased complexity in chip design, and thus growing demand for its tools.

Specific details are as follows:

• According to data compiled by London Stock Exchange Group (LSEG), the company predicts revenue for the fiscal year ending October 31, 2027 will be between $11.10 billion and $11.20 billion, higher than the analyst average estimate of $10.81 billion.

• Its forecast for earnings per share in fiscal 2027 is $19.04 to $19.12, also exceeding the projected $17.81.

• The company plans to repurchase around $1 billion in stock over the coming months.

• Synopsys also aims to achieve around 15% annual compound revenue growth from fiscal year 2026 through fiscal year 2030, and to reach about 50% adjusted operating margin in fiscal 2030.

• "The information from Synopsys' 2026 investor day event last night far exceeded market expectations," Berenberg Securities said in a report to clients.

• According to LSEG data, among 24 analysts covering Synopsys, 22 have issued a "buy" or higher rating, while two have given a "hold" rating.

• On Wednesday, Synopsys signed an agreement (link) to share revenue with OpenAI to develop artificial intelligence models for the chip business.

• Amazon.com's AMZN.O (AWS) also signed a (link) multi-year deal worth more than $1 billion to license chip design intellectual property from Synopsys.

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