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Cadence Design Systems shares pop on earnings beat, custom chip optimism

CNBC
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Cadence Design Systems’ stock surged over 6% after reporting Q4 2025 earnings that exceeded expectations, with adjusted EPS of $1.99 and $1.44 billion in revenue, both up 6% year-over-year. CEO Anirudh Devgan highlighted that 45% of revenue now comes from "system companies"—hyperscalers and device makers like Apple and Google—designing custom chips to optimize hardware-software integration for AI and specialized workloads. Devgan predicted accelerated growth in custom chip development, citing Apple’s smartphone chips and Google’s AI silicon as proof of a broader industry shift toward proprietary semiconductor designs. The company forecasted $5.9–$6 billion in fiscal 2026 revenue, aligning with analyst estimates of $5.94 billion, reflecting strong demand driven by AI infrastructure investments. Cadence competes with Synopsys and Siemens in chip design software, benefiting from increased R&D spending on AI models and custom silicon for enterprise and consumer applications.
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Cadence Design Systems shares pop on earnings beat, custom chip optimism

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In this articleCadence Design Systems stock rose by more than 6% on Wednesday after the chip design software company reported earnings that beat analysts' expectations.

The San Jose-based company reported financials after the bell Tuesday, posting an adjusted earnings per share of $1.99 on revenue of $1.44 billion in the fourth-quarter of 2025, about 6% higher versus the prior year on both measures.Analysts surveyed by LSEG were expecting an EPS of $1.91 and revenue of $1.42 billion.CEO Anirudh Devgan told CNBC's "Squawk on the Street" on Wednesday that about 45% of its business is now coming from what he called "system companies," which include hyperscalers and end producers of phones and cars."System companies want to optimize the hardware and software stack together, and one way to do that is the critical component, is designing their own chips that are optimized to their workload," Devgan said.

Cadence Design Systems has been riding a wave of artificial intelligence-related capital expenditures and research and development efforts by a range of tech enterprises working to create large language models and infuse them into their internal and customer-facing apps and products.Devgan pointed to Apple's efforts with their own smartphone chips, and Google's custom AI silicon as leading examples, and said the trend of system companies doing their own chips "is only going to accelerate," he said.The company said it expects $5.9 billion to $6 billion in revenue for the next fiscal year, at the top end of FactSet's $5.94 billion expectation.Cadence competes with other companies that sell chip design software, including Synopsys and Siemens.Got a confidential news tip? We want to hear from you.Sign up for free newsletters and get more CNBC delivered to your inboxGet this delivered to your inbox, and more info about our products and services.© 2026 Versant Media, LLC.

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Source: CNBC