I'm trying to understand the disconnect with **Synopsys (SNPS)** and would love to hear from people who've followed the company longer than I have.
On paper, it seems like one of the highest-quality businesses in semis:
* Essentially a duopoly in EDA alongside Cadence.
* Sticky software with huge switching costs.
* Every new chip design (AI, automotive, custom silicon, etc.) needs tools like theirs.
* Long runway as chip complexity keeps increasing.
Obviously it's not without issues. The China export restrictions are real, the ANSYS acquisition adds execution risk, and it has historically traded at premium multiples. I completely understand why people aren't willing to pay 40x+ earnings forever.
But that's kind of my question.
The stock is down materially from its highs and sentiment feels...muted. Compared to other semiconductor names, there doesn't seem to be much discussion around it.
**For those who are on the sidelines:**
What would you need to see before buying?
* Lower valuation?
* More clarity on China?
* ANSYS integration completed?
* Faster EPS growth?
* Something else entirely?
My current view leans bullish. It feels like one of those businesses where the moat is much stronger than the current narrative, and over a 5-10 year horizon I struggle to see demand for EDA software going backwards. On the other hand, maybe the market has already correctly priced in that quality and it's simply a great company at a fair price.
Would love to hear both the bull and bear cases from people who've dug into it more deeply. Particularly interested in what I'm missing rather than reasons to confirm my own thesis.
Disclaimer: Written with the assistance of AI.