Synopsys closes a transformational year with record results
Synopsys Inc. (NASDAQ: SNPS) capped a pivotal fiscal 2025 with record fourth‑quarter and full‑year results on December 10, underscoring how its $35 billion acquisition of Ansys and a fresh $2 billion strategic partnership with Nvidia are reshaping the electronic design automation (EDA) leader. [1]
Fourth‑quarter revenue for the period ended October 31 surged to $2.255 billion, up from $1.636 billion a year earlier — roughly 38% year‑over‑year growth — as Synopsys booked its first full quarter of revenue from Ansys, which contributed $667.7 million in Q4 alone. [2]
For the full fiscal year 2025, Synopsys delivered $7.054 billion in revenue, up about 15% from $6.127 billion in fiscal 2024. Ansys added $756.6 million to that total, reflecting how simulation and multi‑physics tools are now central to the company’s strategy rather than a side business. [3]
The company ended the year with an order backlog of $11.4 billion, giving it unusually strong visibility into future revenue at a time when semiconductor and systems companies are still navigating AI‑driven demand swings and geopolitical uncertainty. [4]
Profit picture: GAAP up, non‑GAAP EPS mixed
On a GAAP basis, Synopsys’ profitability improved sharply in Q4:
- Q4 2025 GAAP net income: $448.7 million, or $2.39 per diluted share, up from $279.3 million, or $1.79 per share, a year earlier.
- FY 2025 GAAP net income: $1.336 billion, or $8.07 per share, down from $1.442 billion and $9.25 per share in 2024, reflecting hefty acquisition‑related amortization and restructuring costs. [5]
On a non‑GAAP basis — excluding items such as amortization of purchased intangibles, stock‑based compensation and tax adjustments — results were more nuanced:
- Q4 2025 non‑GAAP net income: $543.1 million, or $2.90 per share, versus $529.9 million, or $3.40 per share, in Q4 2024.
- FY 2025 non‑GAAP net income: $2.138 billion, or $12.91 per share, up from $2.058 billion and $13.20 per share in the prior year. [6]
In other words, revenue and absolute earnings both hit new highs, but per‑share earnings compressed year over year as Synopsys absorbed Ansys‑related costs, higher share count and restructuring charges. Management nevertheless emphasized that both Q4 and full‑year non‑GAAP EPS exceeded guidance, a point also highlighted in AI‑generated summaries of the earnings tables. [7]
Workforce reduction to fund growth after Ansys
Those restructuring costs are tied to a significant streamlining move. In a November 9 filing, Synopsys disclosed that its board approved a plan to cut about 10% of its global workforce by the end of fiscal 2025. The plan is expected to generate $300 million to $350 million in pre‑tax charges, mainly from severance, one‑time termination benefits and selected site closures. [8]
Management framed the move as a way to “re‑mix” spending after the Ansys acquisition, freeing up resources for higher‑growth areas such as AI‑driven design flows, cloud delivery and multi‑physics simulation while driving margin expansion over time. Most of the actual headcount reductions are expected in fiscal 2026, with the restructuring substantially completed by the end of fiscal 2027. [9]
Bold fiscal 2026 outlook: double‑digit growth and higher EPS
Alongside its Q4 print, Synopsys issued detailed guidance for fiscal 2026 that aims to build on the Ansys and Nvidia catalysts:
- Q1 FY 2026 revenue:$2.365–$2.415 billion
- Q1 FY 2026 non‑GAAP EPS:$3.52–$3.58
- Full‑year FY 2026 revenue:$9.56–$9.66 billion
- Full‑year FY 2026 non‑GAAP EPS:$14.32–$14.40 [10]
At the midpoint, that revenue outlook implies roughly 36% top‑line growth versus fiscal 2025, with about $2.9 billion expected to come from Ansys and roughly $110 million in headwind from divested Optical Solutions Group and PowerArtist RTL businesses. [11]
MarketBeat notes that Q1 EPS guidance of 3.52–3.58 comes in well above the $2.92 consensus estimate, while revenue is broadly in line with street expectations. Full‑year 2026 EPS guidance also tops consensus, though the revenue range is slightly shy of the most bullish sales forecasts, reinforcing the message that Synopsys is prioritizing profitability and integration discipline. [12]
The company also outlined expectations for roughly $2.2 billion in operating cash flow, about $1.9 billion in free cash flow, and around $300 million in capital expenditures in fiscal 2026 — numbers that, if achieved, would give it plenty of ammunition for further R&D and shareholder‑friendly uses of cash. [13]
Nvidia’s $2 billion bet cements a powerful AI partnership
Fiscal 2025 was not only about Ansys. On December 1, Nvidia and Synopsys unveiled a multi‑year strategic partnership under which the GPU giant invested $2 billion in Synopsys common stock at $414.79 per share. [14]
The expanded collaboration aims to combine Nvidia’s AI and accelerated computing platforms with Synopsys’ design, IP and simulation tools to help customers design, simulate and verify increasingly complex “physical AI” systems — from advanced chips to full vehicles and industrial equipment — faster and at lower cost. [15]
Analysts have generally viewed the deal as a long‑term positive:
- Coverage compiled by Business Insider and TipRanks shows multiple research houses, including Mizuho and KeyBanc, reiterating bullish or overweight perspectives on Synopsys following Nvidia’s stake, even as some trimmed price targets to account for short‑term dilution. [16]
- The partnership also helped frame Synopsys as a core enabler of Nvidia’s broader AI ambitions, not just another software supplier. [17]
Against that backdrop, the Q4 earnings beat and strong 2026 guidance now look less like an isolated surprise and more like the financial expression of a broader strategy: expand from chip‑level EDA into a “silicon‑to‑systems” engineering platform with Ansys, and plug tightly into Nvidia’s AI compute stack. [18]
Wall Street shifts: Rosenblatt and BofA upgrades, Goldman stays bullish
Analysts had already been warming to Synopsys ahead of the Q4 report, and the earnings release appears to validate much of that positioning.
- Rosenblatt Securities upgraded Synopsys from Neutral to Buy on December 9 while trimming its price target from $605 to $560, arguing that the stock’s pullback since a weak Q3 had reset expectations and that Q4 would show roughly 37–38% revenue growth, driven by the first full quarter of Ansys contributions and accelerating adoption of the Synopsys.ai platform. [19]
- BofA Securities moved Synopsys from Underperform to Neutral on December 8, saying the upcoming earnings call offered a chance to address concerns about China exposure and Intellectual Property (IP) weakness, and pointing to recent engagement between China’s international trade promotion body and major semiconductor players including Synopsys as a potentially constructive sign. [20]
- On December 10, Goldman Sachs analyst James Schneider reiterated a Buy rating and $560 price target, writing that the firm expects the stock to move higher following the Q4 print and guidance update. [21]
MarketBeat’s tally now shows Synopsys with an average rating of “Moderate Buy”, based on 11 Buy, 6 Hold and 1 Sell rating, and an average price target of about $550.67. [22]
These calls were highlighted in the widely followed “Synopsys upgraded, Warner Bros. downgraded: Wall Street’s top analyst calls” note compiled by The Fly and syndicated across TipRanks, SwingTradeBot and Yahoo Finance, underlining Synopsys’ new place near the center of tech investors’ attention. [23]
From 35% slump to a relief rally in Synopsys stock
The enthusiasm around Q4 marks a sharp contrast with investor sentiment just a few months ago. In early September, Synopsys reported a disappointing quarter and cut guidance amid weakness in its design IP and China‑related business, sending the stock down about 35% in a single session. [24]
Since then, three developments have changed the narrative:
- The Ansys deal closed in July 2025, and by Q4 its revenue contribution and cross‑selling potential were becoming-visible in the numbers. [25]
- Nvidia’s $2 billion stake and strategic partnership reframed Synopsys as a core AI infrastructure name rather than a purely cyclical EDA supplier. [26]
- Cost discipline via the 10% workforce reduction convinced many analysts that management is willing to protect margins even as it scales its product portfolio. [27]
As Q4 results hit the tape, multiple outlets reported mid‑ to high‑single‑digit percentage gains in Synopsys shares in after‑hours trading, with Investors Business Daily and Seeking Alpha both citing post‑market jumps of around 5% or more on the earnings beat and 2026 outlook. [28]
During regular trading on December 10, MarketBeat data showed Synopsys up about 2.1% to $475.83, with volume running well above its recent average and the stock still trading below its 52‑week high near $651.73 — a reminder that, even after the rebound, some of the September drawdown has yet to be recovered. [29]
Warner Bros. Discovery downgraded as takeover battle heats up
On the other side of the “upgrade/downgrade” ledger sits Warner Bros. Discovery (NASDAQ: WBD). As Synopsys was upgraded, Seaport Global/Seaport Research cut Warner Bros. Discovery to Neutral from Buy on December 9, a move picked up in the same “top analyst calls” round‑up that highlighted Synopsys. [30]
Seaport did not provide a fresh price target, but cited limited upside after a dramatic rally in WBD shares driven by competing takeover offers and warned of both headline risk and regulatory uncertainty around any final deal, especially given the likely 12–18 month timeline for closing and integration. [31]
The downgrade comes amid an unusually complex bidding war:
- Netflix has proposed a roughly $83 billion deal for Warner Bros. Discovery’s studio and streaming assets, equating to about $27.75 per share in cash and stock, plus the assumption of significant existing and new debt. [32]
- Paramount Skydance responded with a $30‑per‑share all‑cash bid for Warner Bros. Discovery, valued at about $72–78 billion depending on structure, and later sent a letter to WBD shareholders arguing its offer is “superior” and offers greater certainty than Netflix’s more leveraged proposal. [33]
- An Associated Press report notes that Tencent withdrew a planned $1 billion financing contribution to Paramount’s bid to avoid national‑security scrutiny, while sovereign wealth funds from Saudi Arabia, Abu Dhabi and Qatar agreed to forgo management rights to reduce regulatory friction — factors that underscore how politically sensitive any WBD transaction could be. [34]
With WBD’s share price having already jumped close to the level of Paramount’s bid, Seaport and other cautious voices argue that most of the deal premium may already be reflected, leaving investors exposed to months of volatility and regulatory risk with limited additional upside. [35]
A split‑screen for investors: structural growth vs. event‑driven risk
The juxtaposition of Synopsys and Warner Bros. Discovery in December 10’s analyst commentary offers a useful snapshot of how Wall Street is distinguishing between different types of opportunity:
- Synopsys (SNPS) is being framed as a structural growth story: record fiscal 2025 revenue, a huge and growing backlog, earnings guidance that tops expectations, and catalysts from the Ansys integration and Nvidia partnership — albeit with integration risk and workforce reductions to manage. [36]
- Warner Bros. Discovery (WBD) is increasingly seen as an event‑driven special situation, where short‑term returns hinge on which bidder wins, what final price is agreed and how regulators view foreign financing and media consolidation. Here, analysts see price already close to expected take‑out levels and emphasize the risks around timing, approvals and deal structure. [37]
For investors following both tickers, the day’s newsflow underscores a broader theme: in a late‑cycle, AI‑obsessed market, companies with visible multi‑year demand, strong balance sheets and strategic positions in critical technology stacks — like Synopsys in chip and system design — are increasingly rewarded when they back that story with concrete execution and credible guidance. Event‑driven stories such as Warner Bros. Discovery can still generate eye‑catching short‑term moves, but analyst downgrades highlight the importance of carefully weighing deal risk, regulatory complexity and the true upside relative to current prices.
As always, these developments are informational, not investment advice. Anyone considering SNPS, WBD or related names should assess their own risk tolerance, time horizon and financial situation, and, if needed, consult a qualified financial professional before making trading decisions.
References
1. investor.synopsys.com, 2. investor.synopsys.com, 3. investor.synopsys.com, 4. investor.synopsys.com, 5. investor.synopsys.com, 6. investor.synopsys.com, 7. www.stocktitan.net, 8. www.tipranks.com, 9. www.tipranks.com, 10. investor.synopsys.com, 11. investor.synopsys.com, 12. www.marketbeat.com, 13. investor.synopsys.com, 14. nvidianews.nvidia.com, 15. nvidianews.nvidia.com, 16. markets.businessinsider.com, 17. nvidianews.nvidia.com, 18. www.spglobal.com, 19. seekingalpha.com, 20. www.investing.com, 21. www.streetinsider.com, 22. www.marketbeat.com, 23. www.tipranks.com, 24. www.investopedia.com, 25. investor.synopsys.com, 26. nvidianews.nvidia.com, 27. www.tipranks.com, 28. www.investors.com, 29. www.marketbeat.com, 30. finance.yahoo.com, 31. www.tipranks.com, 32. www.morningstar.com, 33. www.barrons.com, 34. apnews.com, 35. www.tipranks.com, 36. investor.synopsys.com, 37. www.tipranks.com
