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Key Takeaways Cadence expects Q3 revenues of $1.595-$1.625 billion and non-GAAP EPS of $2.01-$2.07, driven by AI demand.Growing adoption of agentic AI tools and robust demand across EDA, IP and SDA are likely to support growth.CDNS benefits from strong backlog, though macro uncertainty and U.S.-China tensions remain concerns. Cadence Design Systems, Inc. (CDNS - Free Report) will release results for the third quarter of 2026 on Oct. 26.

The Zacks Consensus Estimate for third-quarter earnings is $2.04 per share, unchanged in the past 60 days. The consensus mark implies a 5.7% increase from the year-ago actual. The Zacks Consensus Estimate for revenues is pinned at $1.61 billion, indicating a nearly 20.3% uptick from the year-ago actual.

Management expects revenues to be $1.595-$1.625 billion for the third quarter. The company reported sales of $1.339 billion in the year-ago quarter. Non-GAAP EPS is anticipated to be between $2.01 and $2.07. The company reported an EPS of $1.93 in the year-ago quarter. 

Cadence has an impressive earnings surprise history. The company’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with an average surprise of 4.94%.

Price Performance
Image Source: Zacks Investment Research

CDNS stock has lost 7% in the past six months against the Computer-Software industry’s growth of 16.6%. The S&P 500 composite and the Zacks Computer and Technology sector have risen 7.5% and 8.6%, respectively, in the same time frame.

Factors Shaping CDNS’ Q3 ResultsBroad-based momentum across electronic design automation (“EDA”), IP and System Design & Analysis (“SDA”), supported by sustained demand for its AI-oriented portfolio amid robust design activity and new system architectures across hyperscaler infrastructure and physical AI, remains the key catalyst.  

The company had a backlog of $8.1 billion at the second quarter-end driven by bookings momentum, while revenues expected to be recognized over the following 12 months from remaining performance obligations totaled $4.2 billion. This provides substantial visibility into future business performance. Cadence’s ratable software model and high mix of recurring revenues are other positives.

AI has been driving a major transformation in semiconductor and system design and Cadence is deeply integrated into this shift. Design activity across several verticals, especially data centers, drones, robotics and automotive, has been robust due to AI, hyperscale computing and 5G. The focus on Generative AI, Agentic AI and Physical AI has been leading to an exponential increase in computing demand and semiconductor innovation.

Rising customer R&D investments in AI-driven automation have been creating a favorable demand environment for Cadence.

On the last earnings call, management cited agentic AI as a durable tailwind. Cadence expects agentic tools to drive higher EDA consumption and usage across its platform as customers run more simulations, verification and implementation cycles, thereby expanding the addressable market. Management highlighted “strong early traction” for its AI Super-Agent portfolio.

Cadence's agentic AI portfolio includes ChipStack, ViraStack, and InnoStack. In September, the company introduced an RTL Generation Agent for its ChipStack AI Super Agent. The expanded capabilities, expected to become available to select early-access customers in the fourth quarter, strengthen the company's longer-term AI-driven growth prospects.

The company has been collaborating with several tech giants, including Qualcomm and NVIDIA, on their next-generation AI designs across both training and inference. Expanding partnerships with Samsung, Taiwan Semiconductor Manufacturing, Intel and Arm Holdings, bodes well.

Cadence expanded its collaboration with TSMC in September, securing tool certification for advanced A14 design tools and introducing additional silicon-proven IP for N3P and N2P technologies. In October, Cadence collaborated with NVIDIA and launched Europe's first sovereign AI platform for semiconductor, system and AI factory design.

Nonetheless, ongoing uncertainty prevailing over global macroeconomic conditions, especially U.S.-China tech tensions, along with stiff competition in the EDA space and inflation, remains a concern ahead of the third-quarter earnings. Management expects third-quarter non-GAAP operating margin between 43.5% and 44.5%, compared with 47.6% in the prior-year quarter. 

A Look at SegmentsCore EDA business (which constitutes Custom IC, Digital IC and Functional Verification businesses) is likely to have gained from demand for the new hardware systems, especially among AI, automotive and high-performance computing clients. Continued adoption of Cadence's digital full-flow solutions, including Tempus and Certus signoff technologies, is likely to have cushioned the segment’s performance.

The SDA division is likely to have gained from the increasing demand for BETA CAE solutions, PCB and advanced packaging solutions and the integration of Hexagon's Design and Engineering business. Growing adoption of the AuraStack AI Super Agent, which automates PCB and advanced packaging design workflows, could further strengthen the division's prospects.

The IP business has been gaining from an expanding silicon solutions portfolio and increasing demand for solutions in AI and HPC use cases. The company has been witnessing higher demand for its Star IP portfolio across AI and HPC applications, including HBM, PCIe, UCIe and LPDDR6.

Earnings Whispers for CDNSOur proven model predicts an earnings beat for Cadence this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is exactly the case here.

CDNS currently has a Zacks Rank #2 and an Earnings ESP of +0.91%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Other Stocks to ConsiderHere are a few other stocks that you may want to consider, as our model shows that these, too, have the right combination of elements to post an earnings beat this season.

Seagate Technology Holdings plc (STX - Free Report) has an Earnings ESP of +2.49% and a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

STX is scheduled to report quarterly figures on Oct. 27, 2026. The Zacks Consensus Estimate for Seagate Technology’s to-be-reported quarter’s earnings and revenues is pinned at $7.40 per share and $4.11 billion, respectively. Shares of Seagate Technology are up 162.8% in the past year.

Intel (INTC - Free Report) currently has an Earnings ESP of +2.22% and a Zacks Rank #2. INTC is scheduled to report quarterly earnings on Oct. 29, 2026. The Zacks Consensus Estimate for Intel’s to-be-reported quarter’s earnings and revenues stands at 39 cents per share and $16.44 billion, respectively. Shares of Intel have gained 123.4% in the past year.

Vertiv (VRT - Free Report) has an Earnings ESP of +0.89% and a Zacks Rank #2 at present. The company is scheduled to report quarterly figures on Oct. 28, 2026. The Zacks Consensus Estimate for Vertiv’s to-be-reported quarter’s earnings and revenues is pinned at $1.82 per share and $3.76 billion, respectively. Shares of Vertiv are up 5.2% in the past year. 

Investors interested in Computer - Software stocks are likely familiar with Progress Software (PRGS - Free Report) and Cadence Design Systems (CDNS - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Progress Software and Cadence Design Systems are sporting Zacks Ranks of #1 (Strong Buy) and #2 (Buy), respectively, right now. Investors should feel comfortable knowing that PRGS likely has seen a stronger improvement to its earnings outlook than CDNS has recently. However, value investors will care about much more than just this.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

PRGS currently has a forward P/E ratio of 7.09, while CDNS has a forward P/E of 40.06. We also note that PRGS has a PEG ratio of 1.42. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. CDNS currently has a PEG ratio of 2.75.

Another notable valuation metric for PRGS is its P/B ratio of 3.37. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, CDNS has a P/B of 13.09.

Based on these metrics and many more, PRGS holds a Value grade of B, while CDNS has a Value grade of F.

PRGS sticks out from CDNS in both our Zacks Rank and Style Scores models, so value investors will likely feel that PRGS is the better option right now.

BERLIN--(BUSINESS WIRE)---- $CDNS #AIforDesign--Cadence (Nasdaq: CDNS) today announced the availability of a sovereign AI data center in Munich that brings together Cadence® OnCloud, NVIDIA Vera and Grace CPU systems, Cadence Reality™ Digital Twin Platform, and the Cadence Millennium™ M2000 AI Supercomputer powered by the NVIDIA Blackwell platform. As the first EDA vendor to deliver a comprehensive sovereign AI platform for semiconductor, system and AI factory design in Europe, Cadence enables customers to design chi.

In the latest trading session, Cadence Design Systems (CDNS) closed at $319.52, marking a -1.95% move from the previous day.

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Cadence Design Systems (CDNS - Free Report) closed the most recent trading day at $325.68, moving +1.93% from the previous trading session. This move outpaced the S&P 500's daily gain of 0.41%. Meanwhile, the Dow lost 0.07%, and the Nasdaq, a tech-heavy index, added 1.11%.

Coming into today, shares of the maker of hardware and software products for validating chip designs had gained 12.94% in the past month. In that same time, the Computer and Technology sector lost 0.92%, while the S&P 500 gained 1.46%.

The investment community will be paying close attention to the earnings performance of Cadence Design Systems in its upcoming release. The company is slated to reveal its earnings on October 26, 2026. The company's earnings per share (EPS) are projected to be $2.04, reflecting a 5.7% increase from the same quarter last year. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $1.61 billion, up 20.27% from the year-ago period.

For the full year, the Zacks Consensus Estimates are projecting earnings of $8.13 per share and revenue of $6.32 billion, which would represent changes of +13.87% and +19.31%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for Cadence Design Systems. These recent revisions tend to reflect the evolving nature of short-term business trends. Consequently, upward revisions in estimates express analysts' positivity towards the business operations and its ability to generate profits.

Our research suggests that these changes in estimates have a direct relationship with upcoming stock price performance. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.19% higher. Right now, Cadence Design Systems possesses a Zacks Rank of #2 (Buy).

From a valuation perspective, Cadence Design Systems is currently exchanging hands at a Forward P/E ratio of 39.28. For comparison, its industry has an average Forward P/E of 16.4, which means Cadence Design Systems is trading at a premium to the group.

It is also worth noting that CDNS currently has a PEG ratio of 2.69. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Computer - Software was holding an average PEG ratio of 1.34 at yesterday's closing price.

The Computer - Software industry is part of the Computer and Technology sector. At present, this industry carries a Zacks Industry Rank of 65, placing it within the top 27% of over 250 industries.

The Zacks Industry Rank assesses the strength of our separate industry groups by calculating the average Zacks Rank of the individual stocks contained within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow CDNS in the coming trading sessions, be sure to utilize Zacks.com.

The market expects Cadence Design Systems (CDNS - Free Report) to deliver a year-over-year increase in earnings on higher revenues when it reports results for the quarter ended September 2026. This widely-known consensus outlook is important in assessing the company's earnings picture, but a powerful factor that might influence its near-term stock price is how the actual results compare to these estimates.

The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released on October 26. On the other hand, if they miss, the stock may move lower.

While management's discussion of business conditions on the earnings call will mostly determine the sustainability of the immediate price change and future earnings expectations, it's worth having a handicapping insight into the odds of a positive EPS surprise.

Zacks Consensus EstimateThis maker of hardware and software products for validating chip designs is expected to post quarterly earnings of $2.04 per share in its upcoming report, which represents a year-over-year change of +5.7%.

Revenues are expected to be $1.61 billion, up 20.3% from the year-ago quarter.

Estimate Revisions TrendThe consensus EPS estimate for the quarter has been revised 0.85% higher over the last 30 days to the current level. This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period.

Investors should keep in mind that an aggregate change may not always reflect the direction of estimate revisions by each of the covering analysts.

Price, Consensus and EPS Surprise

Earnings WhisperEstimate revisions ahead of a company's earnings release offer clues to the business conditions for the period whose results are coming out. This insight is at the core of our proprietary surprise prediction model -- the Zacks Earnings ESP (Expected Surprise Prediction).

The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a more recent version of the Zacks Consensus EPS estimate. The idea here is that analysts revising their estimates right before an earnings release have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier.

Thus, a positive or negative Earnings ESP reading theoretically indicates the likely deviation of the actual earnings from the consensus estimate. However, the model's predictive power is significant for positive ESP readings only.

A positive Earnings ESP is a strong predictor of an earnings beat, particularly when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). Our research shows that stocks with this combination produce a positive surprise nearly 70% of the time, and a solid Zacks Rank actually increases the predictive power of Earnings ESP.

Please note that a negative Earnings ESP reading is not indicative of an earnings miss. Our research shows that it is difficult to predict an earnings beat with any degree of confidence for stocks with negative Earnings ESP readings and/or Zacks Rank of 4 (Sell) or 5 (Strong Sell).

How Have the Numbers Shaped Up for Cadence?For Cadence, the Most Accurate Estimate is higher than the Zacks Consensus Estimate, suggesting that analysts have recently become bullish on the company's earnings prospects. This has resulted in an Earnings ESP of +0.56%.

On the other hand, the stock currently carries a Zacks Rank of #2.

So, this combination indicates that Cadence will most likely beat the consensus EPS estimate.

Does Earnings Surprise History Hold Any Clue?While calculating estimates for a company's future earnings, analysts often consider to what extent it has been able to match past consensus estimates. So, it's worth taking a look at the surprise history for gauging its influence on the upcoming number.

For the last reported quarter, it was expected that Cadence would post earnings of $2.05 per share when it actually produced earnings of $2.11, delivering a surprise of +2.93%.

Over the last four quarters, the company has beaten consensus EPS estimates four times.

Bottom LineAn earnings beat or miss may not be the sole basis for a stock moving higher or lower. Many stocks end up losing ground despite an earnings beat due to other factors that disappoint investors. Similarly, unforeseen catalysts help a number of stocks gain despite an earnings miss.

That said, betting on stocks that are expected to beat earnings expectations does increase the odds of success. This is why it's worth checking a company's Earnings ESP and Zacks Rank ahead of its quarterly release. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.

Cadence appears a compelling earnings-beat candidate. However, investors should pay attention to other factors too for betting on this stock or staying away from it ahead of its earnings release.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

Krilogy Financial LLC bought a new position in Cadence Design Systems, Inc. (NASDAQ:CDNS – Free Report) during the third quarter, according to its most recent 13F filing with the SEC. The institutional investor bought 24,240 shares of the software maker’s stock, valued at approximately $8,004,000.

Several other institutional investors also recently modified their holdings of the stock. Van ECK Associates Corp raised its stake in shares of Cadence Design Systems by 21.8% during the second quarter. Van ECK Associates Corp now owns 4,889,765 shares of the software maker’s stock worth $1,835,227,000 after acquiring an additional 874,392 shares in the last quarter. UBS AM a distinct business unit of UBS ASSET MANAGEMENT AMERICAS LLC boosted its stake in shares of Cadence Design Systems by 1.5% during the second quarter. UBS AM a distinct business unit of UBS ASSET MANAGEMENT AMERICAS LLC now owns 3,385,655 shares of the software maker’s stock valued at $1,270,704,000 after purchasing an additional 48,937 shares during the period. J. Stern & Co. LLP grew its holdings in Cadence Design Systems by 10,159.3% in the 4th quarter. J. Stern & Co. LLP now owns 2,953,256 shares of the software maker’s stock worth $923,129,000 after acquiring an additional 2,924,470 shares during the last quarter. Amundi raised its stake in shares of Cadence Design Systems by 3.8% during the first quarter. Amundi now owns 2,060,334 shares of the software maker’s stock valued at $572,488,000 after acquiring an additional 75,492 shares during the last quarter. Finally, Legal & General Group Plc bought a new position in Cadence Design Systems in the 2nd quarter worth $702,615,000. 84.85% of the stock is currently owned by institutional investors.

Insider Buying and Selling at Cadence Design Systems In other news, VP Paul Cunningham sold 2,000 shares of the stock in a transaction on Tuesday, September 15th. The shares were sold at an average price of $277.12, for a total value of $554,240.00. Following the sale, the vice president owned 121,793 shares in the company, valued at $33,751,276.16. This represents a 1.62% decrease in their ownership of the stock. The transaction was disclosed in a legal filing with the Securities & Exchange Commission, which is available through the SEC website. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, Director Albert Sangiovanni-Vincentelli sold 1,250 shares of the company’s stock in a transaction dated Thursday, October 1st. The stock was sold at an average price of $350.07, for a total transaction of $437,587.50. Following the completion of the transaction, the director owned 39,544 shares of the company’s stock, valued at approximately $13,843,168.08. This trade represents a 3.06% decrease in their position. The disclosure for this sale is available in the SEC filing. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. In the last 90 days, insiders have sold 6,960 shares of company stock valued at $2,185,879. 0.49% of the stock is currently owned by insiders.

Cadence Design Systems News Summary Here are the key news stories impacting Cadence Design Systems this week: Positive Sentiment: Erste Group Bank raised its FY2026 EPS estimate slightly to $6.40 from $6.39, broadly in line with the $6.41 consensus forecast. Erste Group Bank estimate update Positive Sentiment: Cadence’s latest quarterly results remained strong, with revenue of approximately $1.584 billion, record backlog of $8.1 billion and increased full-year 2026 guidance. The company is also scheduled to report third-quarter results on October 26. Cadence stock rotation analysis Neutral Sentiment: Semiconductor equipment and chip-design shares broadly weakened after a strong AI-driven run, with peers including Applied Materials, Lam Research and KLA also declining. This indicates sector-wide profit-taking rather than a Cadence-specific operational shock. Semiconductor equipment stocks slide Negative Sentiment: Cadence trades at a premium valuation, making CDNS more vulnerable to risk reduction in AI- and semiconductor-exposed software names. Synopsys also traded lower, reinforcing the broader electronic-design-automation selloff. Cadence valuation and sector analysis Negative Sentiment: One analysis argues that Cadence’s customers may be gaining negotiating leverage, potentially pressuring pricing, margins or future growth. In addition, reported insider activity shows selling with no purchases over the past six months, which may weigh on sentiment. Cadence customer leverage analysis Wall Street Analysts Forecast Growth A number of analysts have recently commented on CDNS shares. Robert W. Baird boosted their target price on shares of Cadence Design Systems from $415.00 to $420.00 and gave the company an “outperform” rating in a report on Tuesday, July 28th. BNP Paribas Exane lifted their price objective on Cadence Design Systems from $400.00 to $450.00 and gave the stock an “outperform” rating in a report on Thursday, June 18th. Rothschild & Co Redburn raised their target price on Cadence Design Systems from $385.00 to $395.00 and gave the stock a “buy” rating in a report on Tuesday, July 28th. KeyCorp reissued an “overweight” rating on shares of Cadence Design Systems in a research note on Tuesday, July 28th. Finally, The Goldman Sachs Group lifted their price objective on shares of Cadence Design Systems from $410.00 to $470.00 and gave the company a “buy” rating in a research report on Monday, July 13th. One research analyst has rated the stock with a Strong Buy rating, eighteen have assigned a Buy rating and three have given a Hold rating to the company. According to MarketBeat.com, the company presently has an average rating of “Moderate Buy” and an average price target of $404.14.

Get Our Latest Stock Report on Cadence Design Systems

Cadence Design Systems Trading Down 4.1% CDNS stock opened at $334.20 on Wednesday. Cadence Design Systems, Inc. has a 12 month low of $262.75 and a 12 month high of $416.69. The company has a market capitalization of $92.04 billion, a PE ratio of 66.44, a P/E/G ratio of 3.73 and a beta of 1.13. The firm’s 50-day moving average is $319.68 and its 200 day moving average is $338.26. The company has a debt-to-equity ratio of 0.36, a current ratio of 1.74 and a quick ratio of 1.53.

Cadence Design Systems (NASDAQ:CDNS – Get Free Report) last posted its quarterly earnings results on Monday, July 27th. The software maker reported $2.11 EPS for the quarter, beating the consensus estimate of $2.05 by $0.06. The business had revenue of $1.58 billion during the quarter, compared to analyst estimates of $1.58 billion. Cadence Design Systems had a net margin of 23.60% and a return on equity of 27.98%. The company’s quarterly revenue was up 24.2% compared to the same quarter last year. During the same quarter in the previous year, the business posted $1.65 EPS. Cadence Design Systems has set its FY 2026 guidance at 8.050-8.150 EPS and its Q3 2026 guidance at 2.010-2.070 EPS. On average, research analysts anticipate that Cadence Design Systems, Inc. will post 6.41 EPS for the current year.

(Free Report)

Cadence Design Systems, Inc is a technology company that develops electronic design automation (EDA) software, hardware, and semiconductor intellectual property. Its products help engineers design, verify, analyze, and manufacture complex semiconductor chips, printed circuit boards, and electronic systems.

The company’s offerings include digital and custom/analog integrated-circuit design tools, functional verification and emulation platforms, semiconductor intellectual property, and system analysis solutions.

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Cadence Design Systems, Inc.'s partnership and certification with TSMC for A14 chip production processes should provide revenue stability over the next few years. Competitive positioning remains unchanged for CDNS, as Synopsys and Siemens have secured similar TSMC certifications, maintaining a level playing field. Long-term CDNS risks may arise if AI models gain access to advanced design kits, warranting close monitoring of technological advancements.

NorthCrest Asset Manangement LLC increased its holdings in shares of Cadence Design Systems, Inc. (NASDAQ:CDNS – Free Report) by 4,881.8% during the third quarter, according to the company in its most recent disclosure with the SEC. The institutional investor owned 32,332 shares of the software maker’s stock after purchasing an additional 31,683 shares during the period. NorthCrest Asset Manangement LLC’s holdings in Cadence Design Systems were worth $10,676,000 as of its most recent SEC filing.

Several other institutional investors also recently bought and sold shares of the business. Perpetual Ltd boosted its position in Cadence Design Systems by 14.5% during the 3rd quarter. Perpetual Ltd now owns 4,218 shares of the software maker’s stock valued at $1,393,000 after acquiring an additional 534 shares in the last quarter. JGP Wealth Management LLC raised its position in shares of Cadence Design Systems by 9.9% in the 3rd quarter. JGP Wealth Management LLC now owns 3,661 shares of the software maker’s stock worth $1,209,000 after acquiring an additional 329 shares in the last quarter. Armstrong Advisory Group Inc. lifted its stake in shares of Cadence Design Systems by 3,662.5% during the 3rd quarter. Armstrong Advisory Group Inc. now owns 301 shares of the software maker’s stock worth $99,000 after purchasing an additional 293 shares during the last quarter. Gilpin Wealth Management LLC purchased a new stake in shares of Cadence Design Systems during the 3rd quarter worth $224,000. Finally, Schaper Benz & Wise Investment Counsel Inc. WI boosted its position in Cadence Design Systems by 63.0% during the third quarter. Schaper Benz & Wise Investment Counsel Inc. WI now owns 6,561 shares of the software maker’s stock valued at $2,166,000 after purchasing an additional 2,537 shares in the last quarter. 84.85% of the stock is owned by hedge funds and other institutional investors.

Cadence Design Systems Trading Down 1.3% Shares of NASDAQ:CDNS opened at $348.42 on Tuesday. The business’s 50-day moving average is $319.81 and its 200 day moving average is $337.89. Cadence Design Systems, Inc. has a 1 year low of $262.75 and a 1 year high of $416.69. The firm has a market capitalization of $95.95 billion, a P/E ratio of 69.27, a P/E/G ratio of 3.78 and a beta of 1.13. The company has a debt-to-equity ratio of 0.36, a current ratio of 1.74 and a quick ratio of 1.53.

Cadence Design Systems (NASDAQ:CDNS – Get Free Report) last released its quarterly earnings results on Monday, July 27th. The software maker reported $2.11 EPS for the quarter, beating analysts’ consensus estimates of $2.05 by $0.06. Cadence Design Systems had a return on equity of 27.98% and a net margin of 23.60%. The company had revenue of $1.58 billion during the quarter, compared to analysts’ expectations of $1.58 billion. During the same period last year, the business posted $1.65 earnings per share. The firm’s revenue was up 24.2% compared to the same quarter last year. Cadence Design Systems has set its FY 2026 guidance at 8.050-8.150 EPS and its Q3 2026 guidance at 2.010-2.070 EPS. On average, research analysts predict that Cadence Design Systems, Inc. will post 6.41 earnings per share for the current fiscal year. Analysts Set New Price Targets Several equities analysts have issued reports on CDNS shares. Wall Street Zen upgraded Cadence Design Systems from a “hold” rating to a “buy” rating in a research note on Monday. Citigroup raised their price target on shares of Cadence Design Systems from $400.00 to $420.00 and gave the company a “buy” rating in a report on Tuesday, July 28th. Oppenheimer reaffirmed a “market perform” rating and issued a $300.00 price objective (up from $275.00) on shares of Cadence Design Systems in a research report on Tuesday, July 28th. Deutsche Bank Aktiengesellschaft reiterated a “buy” rating and set a $420.00 price objective (up from $400.00) on shares of Cadence Design Systems in a research note on Wednesday, October 7th. Finally, Weiss Ratings cut shares of Cadence Design Systems from a “hold (c+)” rating to a “hold (c)” rating in a research report on Friday, September 25th. One equities research analyst has rated the stock with a Strong Buy rating, eighteen have assigned a Buy rating and three have issued a Hold rating to the company. According to MarketBeat.com, the stock presently has a consensus rating of “Moderate Buy” and an average price target of $404.14.

Get Our Latest Stock Analysis on Cadence Design Systems

Insider Activity at Cadence Design Systems In other Cadence Design Systems news, Director Ita Brennan sold 180 shares of the business’s stock in a transaction that occurred on Thursday, September 10th. The shares were sold at an average price of $285.51, for a total transaction of $51,391.80. Following the sale, the director owned 7,824 shares of the company’s stock, valued at approximately $2,233,830.24. The trade was a 2.25% decrease in their position. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which is available at this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, VP Paul Scannell sold 280 shares of the business’s stock in a transaction on Wednesday, August 26th. The shares were sold at an average price of $339.00, for a total transaction of $94,920.00. Following the sale, the vice president directly owned 31,720 shares in the company, valued at $10,753,080. This trade represents a 0.88% decrease in their ownership of the stock. The SEC filing for this sale provides additional information. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Insiders have sold 6,960 shares of company stock valued at $2,185,879 over the last 90 days. Company insiders own 0.49% of the company’s stock.

Cadence Design Systems Company Profile (Free Report)

Cadence Design Systems, Inc is a technology company that develops electronic design automation (EDA) software, hardware, and semiconductor intellectual property. Its products help engineers design, verify, analyze, and manufacture complex semiconductor chips, printed circuit boards, and electronic systems.

The company’s offerings include digital and custom/analog integrated-circuit design tools, functional verification and emulation platforms, semiconductor intellectual property, and system analysis solutions.

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Cadence Design Systems (CDNS - Free Report) ended the recent trading session at $348.42, demonstrating a -1.25% change from the preceding day's closing price. This move lagged the S&P 500's daily loss of 0.06%. Elsewhere, the Dow gained 0.38%, while the tech-heavy Nasdaq lost 0.44%.

The stock of maker of hardware and software products for validating chip designs has risen by 21.93% in the past month, leading the Computer and Technology sector's gain of 4.85% and the S&P 500's gain of 2.36%.

Analysts and investors alike will be keeping a close eye on the performance of Cadence Design Systems in its upcoming earnings disclosure. The company's earnings report is set to go public on October 26, 2026. The company is predicted to post an EPS of $2.04, indicating a 5.7% growth compared to the equivalent quarter last year. Our most recent consensus estimate is calling for quarterly revenue of $1.61 billion, up 20.27% from the year-ago period.

CDNS's full-year Zacks Consensus Estimates are calling for earnings of $8.13 per share and revenue of $6.32 billion. These results would represent year-over-year changes of +13.87% and +19.29%, respectively.

Investors should also note any recent changes to analyst estimates for Cadence Design Systems. Recent revisions tend to reflect the latest near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the business outlook.

Our research demonstrates that these adjustments in estimates directly associate with imminent stock price performance. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.17% higher. Cadence Design Systems presently features a Zacks Rank of #2 (Buy).

Digging into valuation, Cadence Design Systems currently has a Forward P/E ratio of 43.38. This indicates a premium in contrast to its industry's Forward P/E of 16.72.

Meanwhile, CDNS's PEG ratio is currently 2.97. The PEG ratio bears resemblance to the frequently used P/E ratio, but this parameter also includes the company's expected earnings growth trajectory. The Computer - Software industry currently had an average PEG ratio of 1.51 as of yesterday's close.

The Computer - Software industry is part of the Computer and Technology sector. This industry, currently bearing a Zacks Industry Rank of 52, finds itself in the top 22% echelons of all 250+ industries.

The strength of our individual industry groups is measured by the Zacks Industry Rank, which is calculated based on the average Zacks Rank of the individual stocks within these groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Remember to apply Zacks.com to follow these and more stock-moving metrics during the upcoming trading sessions.

A10 Networks (NYSE:ATEN – Get Free Report) and Cadence Design Systems (NASDAQ:CDNS – Get Free Report) are both technology companies, but which is the better business? We will contrast the two companies based on the strength of their profitability, dividends, analyst recommendations, institutional ownership, valuation, risk and earnings.

Earnings & Valuation
This table compares A10 Networks and Cadence Design Systems”s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue
Price/Sales Ratio
Net Income
Earnings Per Share
Price/Earnings Ratio

A10 Networks
$310.17 million
6.93
$42.14 million
$0.60
49.37

Cadence Design Systems
$5.30 billion
18.34
$1.11 billion
$5.03
70.15

Cadence Design Systems has higher revenue and earnings than A10 Networks. A10 Networks is trading at a lower price-to-earnings ratio than Cadence Design Systems, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares A10 Networks and Cadence Design Systems’ net margins, return on equity and return on assets.

Net Margins
Return on Equity
Return on Assets

A10 Networks
13.85%
23.63%
8.09%

Cadence Design Systems
23.60%
27.98%
15.35%

Institutional and Insider Ownership
98.6% of A10 Networks shares are owned by institutional investors. Comparatively, 84.8% of Cadence Design Systems shares are owned by institutional investors. 1.2% of A10 Networks shares are owned by company insiders. Comparatively, 0.5% of Cadence Design Systems shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Risk and Volatility
A10 Networks has a beta of 1.13, indicating that its stock price is 13% more volatile than the S&P 500. Comparatively, Cadence Design Systems has a beta of 1.13, indicating that its stock price is 13% more volatile than the S&P 500.

Analyst Recommendations
This is a summary of recent recommendations for A10 Networks and Cadence Design Systems, as provided by MarketBeat.

Sell Ratings
Hold Ratings
Buy Ratings
Strong Buy Ratings
Rating Score

A10 Networks
0
5
2
0
2.29

Cadence Design Systems
0
3
18
1
2.91

A10 Networks currently has a consensus target price of $30.88, suggesting a potential upside of 4.23%. Cadence Design Systems has a consensus target price of $404.14, suggesting a potential upside of 14.54%. Given Cadence Design Systems’ stronger consensus rating and higher possible upside, analysts plainly believe Cadence Design Systems is more favorable than A10 Networks.

Summary
Cadence Design Systems beats A10 Networks on 12 of the 14 factors compared between the two stocks.

About A10 Networks
(Get Free Report)

A10 Networks, Inc. provides networking solutions in the Americas, Japan, rest of Asia Pacific, Europe, the Middle East, and Africa. The company offers Thunder Application Delivery Controller that provides advanced server load balancing; Thunder Carrier Grade Networking, which provides standards-compliant address and protocol translation services between varying types of internet protocol addresses; Thunder Secure Sockets Layer (SSL) Insight that decrypts SSL-encrypted traffic and forwards it to a third-party security device for deep packet inspection; and Thunder Convergent Firewall, which addresses multiple critical security capabilities in one package. It also provides intelligent management and automation tool comprising harmony controller that provides intelligent management, automation, and analytics for secure application delivery. In addition, the company offers A10 Defend Threat Control, a standalone SaaS platform; A10 Defend Orchestrator provides a centralized point of control for seamless distributed denial of service (DDoS) defense management and execution; A10 Defend Detector, a Netflow, Sflow, IPFIX-based DDoS detector used to easily manage the scale and heterogenous nature of SP networks; and A10 Defend Mitigator, a precision, automated, scalable, and intelligent DDoS mitigation solution. It delivers its solutions in optimized hardware appliances, bare metal software, containerized software, virtual appliances, and cloud-native software forms. The company serves cloud providers; cloud, telecommunications, and multiple system and cable service providers; government organizations; and enterprises in the telecommunications, technology, industrial, government, retail, financial, gaming, and education industries. It markets its products through sales organizations; and distribution channel partners, such as distributors, value added resellers, and system integrators. A10 Networks, Inc. was incorporated in 2004 and is headquartered in San Jose, California.

(Get Free Report)

Cadence Design Systems, Inc. provides software, hardware, services, and reusable integrated circuit (IC) design blocks worldwide. The company offers functional verification services, including emulation and prototyping hardware. Its functional verification offering consists of JasperGold, a formal verification platform; Xcelium, a parallel logic simulation platform; Palladium, an enterprise emulation platform; and Protium, a prototyping platform for chip verification. The company also provides digital IC design and sign off products, including Genus synthesis and Joules RTL power solutions, as well as Modus DFT software solution to reduce systems-on-chip design-for-test time; physical implementation tools, such as place and route, optimization, and multiple patterning preparation; and Innovus implementation system, a physical implementation system. In addition, it offers custom IC design and simulation products to create schematic and physical representations of circuits down to the transistor level for analog, mixed-signal, custom digital, memory, and radio frequency designs; and system design and analysis products to develop printed circuit boards and IC packages, as well as to analyze electromagnetic, electro-thermal, and other multi-physics effects. Further, the company provides intellectual property (IP) products comprising pre-verified and customizable functional blocks to integrate into customer's ICs; and verification IP with memory models to emulate and model the expected behavior and interaction of standard industry system interface protocols. Additionally, it offers services related to methodology, education, and hosted design solutions, as well as technical support and maintenance services. The company serves consumer, hyperscale computing, 5G communications, mobile, automotive, aerospace and defense, industrial, and life science industries. Cadence Design Systems, Inc. was incorporated in 1987 and is headquartered in San Jose, California.

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The recommendations of Wall Street analysts are often relied on by investors when deciding whether to buy, sell, or hold a stock. Media reports about these brokerage-firm-employed (or sell-side) analysts changing their ratings often affect a stock's price. Do they really matter, though?

Before we discuss the reliability of brokerage recommendations and how to use them to your advantage, let's see what these Wall Street heavyweights think about Cadence Design Systems (CDNS - Free Report) .

Cadence currently has an average brokerage recommendation (ABR) of 1.30, on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell, etc.) made by 23 brokerage firms. An ABR of 1.30 approximates between Strong Buy and Buy.

Of the 23 recommendations that derive the current ABR, 19 are Strong Buy and one is Buy. Strong Buy and Buy respectively account for 82.6% and 4.4% of all recommendations.

Brokerage Recommendation Trends for CDNS

Check price target & stock forecast for Cadence here>>>

While the ABR calls for buying Cadence, it may not be wise to make an investment decision solely based on this information. Several studies have shown limited to no success of brokerage recommendations in guiding investors to pick stocks with the best price increase potential.

Are you wondering why? The vested interest of brokerage firms in a stock they cover often results in a strong positive bias of their analysts in rating it. Our research shows that for every "Strong Sell" recommendation, brokerage firms assign five "Strong Buy" recommendations.

This means that the interests of these institutions are not always aligned with those of retail investors, giving little insight into the direction of a stock's future price movement. It would therefore be best to use this information to validate your own analysis or a tool that has proven to be highly effective at predicting stock price movements.

Zacks Rank, our proprietary stock rating tool with an impressive externally audited track record, categorizes stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), and is an effective indicator of a stock's price performance in the near future. Therefore, using the ABR to validate the Zacks Rank could be an efficient way of making a profitable investment decision.

ABR Should Not Be Confused With Zacks RankAlthough both Zacks Rank and ABR are displayed in a range of 1--5, they are different measures altogether.

Broker recommendations are the sole basis for calculating the ABR, which is typically displayed in decimals (such as 1.28). The Zacks Rank, on the other hand, is a quantitative model designed to harness the power of earnings estimate revisions. It is displayed in whole numbers -- 1 to 5.

Analysts employed by brokerage firms have been and continue to be overly optimistic with their recommendations. Since the ratings issued by these analysts are more favorable than their research would support because of the vested interest of their employers, they mislead investors far more often than they guide.

On the other hand, earnings estimate revisions are at the core of the Zacks Rank. And empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

In addition, the different Zacks Rank grades are applied proportionately to all stocks for which brokerage analysts provide current-year earnings estimates. In other words, this tool always maintains a balance among its five ranks.

There is also a key difference between the ABR and Zacks Rank when it comes to freshness. When you look at the ABR, it may not be up-to-date. Nonetheless, since brokerage analysts constantly revise their earnings estimates to reflect changing business trends, and their actions get reflected in the Zacks Rank quickly enough, it is always timely in predicting future stock prices.

Should You Invest in CDNS?In terms of earnings estimate revisions for Cadence, the Zacks Consensus Estimate for the current year has increased 0.2% over the past month to $8.13.

Analysts' growing optimism over the company's earnings prospects, as indicated by strong agreement among them in revising EPS estimates higher, could be a legitimate reason for the stock to soar in the near term.

The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #2 (Buy) for Cadence. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Therefore, the Buy-equivalent ABR for Cadence may serve as a useful guide for investors.

In the latest close session, Cadence Design Systems (CDNS - Free Report) was up +1.72% at $359.55. This move outpaced the S&P 500's daily gain of 0.58%. Meanwhile, the Dow experienced a rise of 0.49%, and the technology-dominated Nasdaq saw an increase of 0.45%.

The maker of hardware and software products for validating chip designs's shares have seen an increase of 20.76% over the last month, surpassing the Computer and Technology sector's gain of 6.31% and the S&P 500's gain of 0.84%.

The investment community will be paying close attention to the earnings performance of Cadence Design Systems in its upcoming release. The company is slated to reveal its earnings on October 26, 2026. On that day, Cadence Design Systems is projected to report earnings of $2.04 per share, which would represent year-over-year growth of 5.7%. Meanwhile, the latest consensus estimate predicts the revenue to be $1.61 billion, indicating a 20.23% increase compared to the same quarter of the previous year.

For the full year, the Zacks Consensus Estimates are projecting earnings of $8.13 per share and revenue of $6.32 billion, which would represent changes of +13.87% and +19.28%, respectively, from the prior year.

Investors should also note any recent changes to analyst estimates for Cadence Design Systems. Such recent modifications usually signify the changing landscape of near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the business outlook.

Our research demonstrates that these adjustments in estimates directly associate with imminent stock price performance. To take advantage of this, we've established the Zacks Rank, an exclusive model that considers these estimated changes and delivers an operational rating system.

The Zacks Rank system, which varies between #1 (Strong Buy) and #5 (Strong Sell), carries an impressive track record of exceeding expectations, confirmed by external audits, with stocks at #1 delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has shifted 0.07% upward. Cadence Design Systems is holding a Zacks Rank of #2 (Buy) right now.

Valuation is also important, so investors should note that Cadence Design Systems has a Forward P/E ratio of 43.49 right now. This indicates a premium in contrast to its industry's Forward P/E of 16.67.

We can also see that CDNS currently has a PEG ratio of 2.99. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Computer - Software was holding an average PEG ratio of 1.44 at yesterday's closing price.

The Computer - Software industry is part of the Computer and Technology sector. Currently, this industry holds a Zacks Industry Rank of 61, positioning it in the top 25% of all 250+ industries.

The Zacks Industry Rank is ordered from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.

SAN JOSE, Calif.--(BUSINESS WIRE)---- $CDNS--Cadence (Nasdaq: CDNS) will hold its third quarter 2026 financial results webcast on Monday, October 26, 2026.

Cadence Design Systems, Inc. (NASDAQ:CDNS – Get Free Report)’s stock price traded up 7.4% during trading on Thursday. The stock traded as high as $349.77 and last traded at $354.6320. Approximately 291,709 shares were traded during trading, a decline of 88% from the average daily volume of 2,457,548 shares. The stock had previously closed at $330.18.

Analyst Upgrades and Downgrades Several research firms recently weighed in on CDNS. Wall Street Zen raised Cadence Design Systems from a “hold” rating to a “buy” rating in a research note on Saturday, September 26th. Oppenheimer restated a “market perform” rating and set a $300.00 target price on shares of Cadence Design Systems in a research report on Tuesday, July 28th. Piper Sandler upped their price target on shares of Cadence Design Systems from $325.00 to $349.00 and gave the company a “neutral” rating in a report on Tuesday, July 28th. Robert W. Baird increased their price target on shares of Cadence Design Systems from $415.00 to $420.00 and gave the company an “outperform” rating in a research report on Tuesday, July 28th. Finally, Stifel Nicolaus raised their price objective on shares of Cadence Design Systems from $395.00 to $432.00 and gave the stock a “buy” rating in a research note on Tuesday, June 9th. One analyst has rated the stock with a Strong Buy rating, twelve have given a Buy rating and three have issued a Hold rating to the stock. According to data from MarketBeat.com, the stock presently has a consensus rating of “Moderate Buy” and an average target price of $404.12.

Read Our Latest Research Report on Cadence Design Systems

Cadence Design Systems Trading Up 0.2% The stock has a market cap of $96.76 billion, a PE ratio of 69.85, a PEG ratio of 3.76 and a beta of 1.13. The business has a 50-day moving average of $317.93 and a 200 day moving average of $334.86. The company has a debt-to-equity ratio of 0.36, a quick ratio of 1.53 and a current ratio of 1.74. Cadence Design Systems (NASDAQ:CDNS – Get Free Report) last released its earnings results on Monday, July 27th. The software maker reported $2.11 earnings per share (EPS) for the quarter, beating analysts’ consensus estimates of $2.05 by $0.06. Cadence Design Systems had a net margin of 23.60% and a return on equity of 27.98%. The company had revenue of $1.58 billion for the quarter, compared to analyst estimates of $1.58 billion. During the same period in the prior year, the firm earned $1.65 EPS. The firm’s quarterly revenue was up 24.2% on a year-over-year basis. Cadence Design Systems has set its FY 2026 guidance at 8.050-8.150 EPS and its Q3 2026 guidance at 2.010-2.070 EPS. Equities research analysts predict that Cadence Design Systems, Inc. will post 6.4 EPS for the current fiscal year.

Insider Activity In other Cadence Design Systems news, Director Albert Sangiovanni-Vincentelli sold 1,250 shares of the stock in a transaction on Tuesday, August 25th. The stock was sold at an average price of $320.88, for a total transaction of $401,100.00. Following the transaction, the director owned 40,794 shares of the company’s stock, valued at $13,089,978.72. This represents a 2.97% decrease in their position. The sale was disclosed in a document filed with the SEC, which is available through this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, Director Ita Brennan sold 180 shares of Cadence Design Systems stock in a transaction on Thursday, September 10th. The shares were sold at an average price of $285.51, for a total value of $51,391.80. Following the completion of the sale, the director directly owned 7,824 shares of the company’s stock, valued at approximately $2,233,830.24. This represents a 2.25% decrease in their position. The disclosure for this sale is available in the SEC filing. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Insiders sold a total of 5,710 shares of company stock valued at $1,748,292 over the last quarter. Insiders own 0.49% of the company’s stock.

Institutional Trading of Cadence Design Systems Hedge funds and other institutional investors have recently added to or reduced their stakes in the business. State Street Corp boosted its position in Cadence Design Systems by 1.1% in the 4th quarter. State Street Corp now owns 12,603,368 shares of the software maker’s stock valued at $3,939,561,000 after buying an additional 135,206 shares during the last quarter. Van ECK Associates Corp increased its position in shares of Cadence Design Systems by 21.8% during the second quarter. Van ECK Associates Corp now owns 4,889,765 shares of the software maker’s stock worth $1,835,227,000 after acquiring an additional 874,392 shares during the last quarter. UBS AM a distinct business unit of UBS ASSET MANAGEMENT AMERICAS LLC increased its position in shares of Cadence Design Systems by 1.5% during the second quarter. UBS AM a distinct business unit of UBS ASSET MANAGEMENT AMERICAS LLC now owns 3,385,655 shares of the software maker’s stock worth $1,270,704,000 after acquiring an additional 48,937 shares during the last quarter. J. Stern & Co. LLP lifted its stake in shares of Cadence Design Systems by 10,159.3% in the fourth quarter. J. Stern & Co. LLP now owns 2,953,256 shares of the software maker’s stock worth $923,129,000 after acquiring an additional 2,924,470 shares in the last quarter. Finally, Amundi lifted its stake in shares of Cadence Design Systems by 3.8% in the first quarter. Amundi now owns 2,060,334 shares of the software maker’s stock worth $572,488,000 after acquiring an additional 75,492 shares in the last quarter. Hedge funds and other institutional investors own 84.85% of the company’s stock.

(Get Free Report)

Cadence Design Systems, Inc is a technology company that develops electronic design automation (EDA) software, hardware, and semiconductor intellectual property. Its products help engineers design, verify, analyze, and manufacture complex semiconductor chips, printed circuit boards, and electronic systems.

The company’s offerings include digital and custom/analog integrated-circuit design tools, functional verification and emulation platforms, semiconductor intellectual property, and system analysis solutions.

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Cadence Design Systems (CDNS - Free Report) has recently been on Zacks.com's list of the most searched stocks. Therefore, you might want to consider some of the key factors that could influence the stock's performance in the near future.

Shares of this maker of hardware and software products for validating chip designs have returned -3.6% over the past month versus the Zacks S&P 500 composite's +1% change. The Zacks Computer - Software industry, to which Cadence belongs, has lost 3.3% over this period. Now the key question is: Where could the stock be headed in the near term?

While media releases or rumors about a substantial change in a company's business prospects usually make its stock 'trending' and lead to an immediate price change, there are always some fundamental facts that eventually dominate the buy-and-hold decision-making.

Earnings Estimate RevisionsRather than focusing on anything else, we at Zacks prioritize evaluating the change in a company's earnings projection. This is because we believe the fair value for its stock is determined by the present value of its future stream of earnings.

We essentially look at how sell-side analysts covering the stock are revising their earnings estimates to reflect the impact of the latest business trends. And if earnings estimates go up for a company, the fair value for its stock goes up. A higher fair value than the current market price drives investors' interest in buying the stock, leading to its price moving higher. This is why empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

Cadence is expected to post earnings of $2.04 per share for the current quarter, representing a year-over-year change of +5.7%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.2%.

The consensus earnings estimate of $8.12 for the current fiscal year indicates a year-over-year change of +13.7%. This estimate has remained unchanged over the last 30 days.

For the next fiscal year, the consensus earnings estimate of $9.43 indicates a change of +16.1% from what Cadence is expected to report a year ago. Over the past month, the estimate has changed +0.2%.

Having a strong externally audited track record, our proprietary stock rating tool, the Zacks Rank, offers a more conclusive picture of a stock's price direction in the near term, since it effectively harnesses the power of earnings estimate revisions. Due to the size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, Cadence is rated Zacks Rank #2 (Buy).

The chart below shows the evolution of the company's forward 12-month consensus EPS estimate:

12 Month EPS

Revenue Growth ForecastWhile earnings growth is arguably the most superior indicator of a company's financial health, nothing happens as such if a business isn't able to grow its revenues. After all, it's nearly impossible for a company to increase its earnings for an extended period without increasing its revenues. So, it's important to know a company's potential revenue growth.

For Cadence, the consensus sales estimate for the current quarter of $1.61 billion indicates a year-over-year change of +20.2%. For the current and next fiscal years, $6.31 billion and $7.13 billion estimates indicate +19.2% and +12.9% changes, respectively.

Last Reported Results and Surprise HistoryCadence reported revenues of $1.58 billion in the last reported quarter, representing a year-over-year change of +24.2%. EPS of $2.11 for the same period compares with $1.65 a year ago.

Compared to the Zacks Consensus Estimate of $1.58 billion, the reported revenues represent a surprise of +0.52%. The EPS surprise was +2.93%.

The company beat consensus EPS estimates in each of the trailing four quarters. The company topped consensus revenue estimates each time over this period.

ValuationNo investment decision can be efficient without considering a stock's valuation. Whether a stock's current price rightly reflects the intrinsic value of the underlying business and the company's growth prospects is an essential determinant of its future price performance.

Comparing the current value of a company's valuation multiples, such as its price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF), to its own historical values helps ascertain whether its stock is fairly valued, overvalued, or undervalued, whereas comparing the company relative to its peers on these parameters gives a good sense of how reasonable its stock price is.

The Zacks Value Style Score (part of the Zacks Style Scores system), which pays close attention to both traditional and unconventional valuation metrics to grade stocks from A to F (an A is better than a B; a B is better than a C; and so on), is pretty helpful in identifying whether a stock is overvalued, rightly valued, or temporarily undervalued.

Cadence is graded F on this front, indicating that it is trading at a premium to its peers. Click here to see the values of some of the valuation metrics that have driven this grade.

Bottom LineThe facts discussed here and much other information on Zacks.com might help determine whether or not it's worthwhile paying attention to the market buzz about Cadence. However, its Zacks Rank #2 does suggest that it may outperform the broader market in the near term.

Cadence Design Systems (CDNS - Free Report) ended the recent trading session at $326.03, demonstrating a +1.25% change from the preceding day's closing price. The stock's change was more than the S&P 500's daily gain of 0.51%. At the same time, the Dow added 0.93%, and the tech-heavy Nasdaq gained 0.48%.

The stock of maker of hardware and software products for validating chip designs has fallen by 7.35% in the past month, lagging the Computer and Technology sector's gain of 6.54% and the S&P 500's gain of 0.74%.

The investment community will be closely monitoring the performance of Cadence Design Systems in its forthcoming earnings report. It is anticipated that the company will report an EPS of $2.04, marking a 5.7% rise compared to the same quarter of the previous year. Simultaneously, our latest consensus estimate expects the revenue to be $1.61 billion, showing a 20.23% escalation compared to the year-ago quarter.

Looking at the full year, the Zacks Consensus Estimates suggest analysts are expecting earnings of $8.12 per share and revenue of $6.31 billion. These totals would mark changes of +13.73% and +19.18%, respectively, from last year.

It's also important for investors to be aware of any recent modifications to analyst estimates for Cadence Design Systems. Recent revisions tend to reflect the latest near-term business trends. Therefore, positive revisions in estimates convey analysts' confidence in the business performance and profit potential.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, running from #1 (Strong Buy) to #5 (Strong Sell), holds an admirable track record of superior performance, independently audited, with #1 stocks contributing an average annual return of +25% since 1988. Over the last 30 days, the Zacks Consensus EPS estimate has remained unchanged. Cadence Design Systems is currently sporting a Zacks Rank of #3 (Hold).

With respect to valuation, Cadence Design Systems is currently being traded at a Forward P/E ratio of 39.65. For comparison, its industry has an average Forward P/E of 16.25, which means Cadence Design Systems is trading at a premium to the group.

One should further note that CDNS currently holds a PEG ratio of 2.72. The PEG ratio bears resemblance to the frequently used P/E ratio, but this parameter also includes the company's expected earnings growth trajectory. The Computer - Software industry currently had an average PEG ratio of 1.5 as of yesterday's close.

The Computer - Software industry is part of the Computer and Technology sector. At present, this industry carries a Zacks Industry Rank of 159, placing it within the bottom 36% of over 250 industries.

The Zacks Industry Rank assesses the strength of our separate industry groups by calculating the average Zacks Rank of the individual stocks contained within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Keep in mind to rely on Zacks.com to watch all these stock-impacting metrics, and more, in the succeeding trading sessions.

Cadence Collaborates With TSMC to Deliver Certified Tool Solutions and Industry-Leading, Silicon-Proven UALink IP on TSMC Advanced Processes Cadence (Nasdaq: CDNS) today announced an expanded partnership with TSMC to deliver advanced capabilities for AI and HPC designers. Cadence has achieved tool certification for TSMC’s advanced A14 process, demonstrated an industry-leading UALink solution in TSMC N3P, and introduced new silicon-proven IP for N3P and N2P technologies. Through this partnership, the companies are enabling agentic AI chip and 3D-IC design flows across TSMC's N3, N2, A16™ and A14 process technologies, including TSMC 3DFabric® support for wafer-scale systems with hundreds of chiplets.

“Cadence's partnership with TSMC continues to deliver breakthrough innovations that enable leading‑edge customers to accelerate their most advanced semiconductor designs," said Chin‑Chi Teng, senior vice president and general manager of the Digital and Signoff Group at Cadence. "With AI‑driven design flows, silicon‑proven IP and 3D-IC solutions, we're helping customers achieve faster time to market and improved PPA on TSMC's leading‑edge process technologies.”

“TSMC, together with our Open Innovation Platform® (OIP) partners like Cadence, is addressing the key demands of semiconductor development to achieve higher performance and energy efficiency in AI systems," said Aveek Sarkar, director of the Ecosystem and Alliance Management Division at TSMC. "With broad collaboration on AI-based solutions, our longstanding partnership is further accelerating our mutual customers’ journey of expanding AI with leadership silicon.”

A14 Certified Tool Flows for Next-Generation Computing

Cadence's digital full flow, signoff flow, and custom/analog flows are now certified for TSMC A16™ and A14 process technologies. The digital full flow features the Innovus™ Implementation System, Cadence Cerebrus® Intelligent Chip Explorer for DTCO and enhanced signoff tools including the Tempus™ Timing and ECO Solution, EMX® Planar 3D Solver, Voltus™ IC Power Integrity Solution, Quantus™ Extraction Solution, Pegasus™ Verification System, and the Liberate™ Characterization Portfolio and the enabled Genus™ Synthesis Solution.

For custom and analog design, Virtuoso® Studio solutions include design‑rule‑correct layout generation and automated design migration to TSMC A16 and A14, reducing iterations by up to 2.5X and improving first‑pass success for AI, HPC and mobile SoCs.

On the IP front, UCIe™-64G has been taped out on TSMC A14, LPDDR6 IP is in development, and a wide selection of HPC & AI memory IP and other protocols needed for compute chiplets have been prioritized for development. Artisan® Foundation IP and mixed‑signal IP for TSMC A14 are also in development and are expected to be available in Q4 2026, including standard cells, GPIO, and Memory Compilers for HPC/AI and networking applications.

N2P Certified Tool Flows and IP for Infrastructure AI and Physical AI Applications

Cadence analog, digital, and signoff tool flows have been certified for TSMC N2P. The Virtuoso Layout Suite has added enhanced connectivity models providing a production-ready custom design environment for quicker design starts. Further, the certified flows will enable faster tape-outs and designer productivity. Taped-out N2P IP includes DDR5, LPDDR5, and PCIe 6.0, with PCIe 3.0 IP expected to tape out in Q4 2026. UCIe-64G IP on N2P silicon is in the testing lab and has been characterized on N3P.

Expanded 3DFabric® and TSMC-COUPE™ Support for Scaling to Hundreds of Chiplets

Cadence solutions are enabled supporting TSMC SoW-X full design flow with hundreds of chiplets and millions of bumps. Also enabled is the design of 5X reticle‑size CoWoS‑L‑style advanced packages, and ability to integrate key technology components such as SoIC, eDTC, MIMCap, IVR, HBM logic base die, and substrate, using Integrity 3D-IC for system planning and assembly.

A pre-simulation-driven, die-to-die auto-routing flow is now certified with the Cadence Allegro® Substrate Router and the Cadence OmniRoute Advanced Interconnect Router, automatically deriving signal-integrity-optimized routing strategies across all CoWoS® architectures and targeting UCIe requirements.

TSMC-COUPE™ (Compact Universal Photonic Engine) for high‑bandwidth photonic‑to‑silicon connectivity is enabled for integration with Cadence 224G SerDes IP. This SerDes IP is aligned with the UALink, ESUN, UltraEthernet and CPO ecosystems, complementing a complete portfolio of IP for HPC/AI applications that includes HBM4/4E, LPDDR6/5X, DDR5-MRDIMM, PCIe 7.0, and UCIe 64G.

Customer Taping Out

Global Unichip Corp. (GUC) leverages Cadence solutions to deliver advanced custom silicon for AI accelerators and hyperscale systems on TSMC's leading-edge process technologies. Cadence-driven automation helps GUC reduce schedule risk for new process technology engagements.

“As designs scale to leading‑edge TSMC process technologies such as N3P and N2P, success depends on tightly optimized execution across increasingly complex system requirements—especially when working with the early‑adopters where schedule risk is highest," said Louis Lin, senior vice president at Global Unichip Corp. “Cadence's solutions provide the predictability, performance and silicon correlation we need to successfully deliver and tape out complex designs on TSMC's most advanced nodes.”

Visit Cadence at 2026 TSMC OIP Ecosystem Forum

The innovations delivered through Cadence’s collaboration with TSMC will be showcased at the 2026 TSMC North America OIP Ecosystem Forum held on September 23 at the Santa Clara Convention Center.

About Cadence

Cadence is a market leader in AI and digital twins, pioneering the application of computational software to accelerate innovation in the engineering design of silicon to systems. Our design solutions, based on Cadence's Intelligent System Design™ strategy, are essential for the world's leading semiconductor and systems companies to build their next‑generation products from chips to full electromechanical systems that serve a wide range of markets, including hyperscale computing, mobile communications, automotive, aerospace, industrial, life sciences and robotics. In 2024, Cadence was recognized by the Wall Street Journal as one of the world's top 100 best-managed companies. Cadence solutions offer limitless opportunities—learn more at www.cadence.com.

© 2026 Cadence Design Systems, Inc. All rights reserved worldwide. Cadence, the Cadence logo and the other Cadence marks found at www.cadence.com/go/trademarks are trademarks or registered trademarks of Cadence Design Systems, Inc. All other trademarks are the property of their respective owners.

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Disclosures I/we have no positions in any stocks mentioned, and have no plans to buy any new positions in the stocks mentioned within the next 72 hours.

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Investors often turn to recommendations made by Wall Street analysts before making a Buy, Sell, or Hold decision about a stock. While media reports about rating changes by these brokerage-firm employed (or sell-side) analysts often affect a stock's price, do they really matter?

Before we discuss the reliability of brokerage recommendations and how to use them to your advantage, let's see what these Wall Street heavyweights think about Cadence Design Systems (CDNS - Free Report) .

Cadence currently has an average brokerage recommendation (ABR) of 1.38, on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell, etc.) made by 24 brokerage firms. An ABR of 1.38 approximates between Strong Buy and Buy.

Of the 24 recommendations that derive the current ABR, 19 are Strong Buy and one is Buy. Strong Buy and Buy respectively account for 79.2% and 4.2% of all recommendations.

Brokerage Recommendation Trends for CDNS

Check price target & stock forecast for Cadence here>>>

The ABR suggests buying Cadence, but making an investment decision solely on the basis of this information might not be a good idea. According to several studies, brokerage recommendations have little to no success guiding investors to choose stocks with the most potential for price appreciation.

Are you wondering why? The vested interest of brokerage firms in a stock they cover often results in a strong positive bias of their analysts in rating it. Our research shows that for every "Strong Sell" recommendation, brokerage firms assign five "Strong Buy" recommendations.

In other words, their interests aren't always aligned with retail investors, rarely indicating where the price of a stock could actually be heading. Therefore, the best use of this information could be validating your own research or an indicator that has proven to be highly successful in predicting a stock's price movement.

Zacks Rank, our proprietary stock rating tool with an impressive externally audited track record, categorizes stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), and is an effective indicator of a stock's price performance in the near future. Therefore, using the ABR to validate the Zacks Rank could be an efficient way of making a profitable investment decision.

Zacks Rank Should Not Be Confused With ABRIn spite of the fact that Zacks Rank and ABR both appear on a scale from 1 to 5, they are two completely different measures.

The ABR is calculated solely based on brokerage recommendations and is typically displayed with decimals (example: 1.28). In contrast, the Zacks Rank is a quantitative model allowing investors to harness the power of earnings estimate revisions. It is displayed in whole numbers -- 1 to 5.

It has been and continues to be the case that analysts employed by brokerage firms are overly optimistic with their recommendations. Because of their employers' vested interests, these analysts issue more favorable ratings than their research would support, misguiding investors far more often than helping them.

On the other hand, earnings estimate revisions are at the core of the Zacks Rank. And empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

Furthermore, the different grades of the Zacks Rank are applied proportionately across all stocks for which brokerage analysts provide earnings estimates for the current year. In other words, at all times, this tool maintains a balance among the five ranks it assigns.

Another key difference between the ABR and Zacks Rank is freshness. The ABR is not necessarily up-to-date when you look at it. But, since brokerage analysts keep revising their earnings estimates to account for a company's changing business trends, and their actions get reflected in the Zacks Rank quickly enough, it is always timely in indicating future price movements.

Is CDNS Worth Investing In?Looking at the earnings estimate revisions for Cadence, the Zacks Consensus Estimate for the current year has remained unchanged over the past month at $8.12.

Analysts' steady views regarding the company's earnings prospects, as indicated by an unchanged consensus estimate, could be a legitimate reason for the stock to perform in line with the broader market in the near term.

The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #3 (Hold) for Cadence. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

It may therefore be prudent to be a little cautious with the Buy-equivalent ABR for Cadence.

The artificial intelligence (AI) build-out has made chip companies some of the fastest-growing large businesses in the world. Nvidia (NVDA +1.34%) grew revenue 106% year over year in its most recent quarter. Broadcom (AVGO +2.97%) grew 86%.

Micron Technology (MU +3.92%) more than quadrupled its sales. Even Marvell Technology (MRVL +1.45%), the group's smallest, grew 37%.

But holding a stock through 2030 is a different bet than chasing last quarter's growth. AI spending will likely cool at some point over the next four years. What matters then is where in the chip supply chain the profits hold up.

Here's what each one has to keep doing for a four-year hold to work.

Image source: Getty Images.

Nvidia: the platformNvidia's revenue in the fiscal second quarter of 2027 (ended July 26) rose 106% year over year to $96.2 billion, with $89 billion of that coming from data centers. In late August, management told analysts it expects revenue to grow approximately 70% in fiscal 2028 -- an outlook it called limited by supply, not demand.

At about $212 as of this writing, shares trade at about 14 times fiscal 2028's estimated earnings. That price, I'd argue, stops giving Nvidia credit after next year.

The job through 2030 is to stay the platform AI computing runs on (the chips, the networking, and the software) even as its biggest customers fund custom alternatives.

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Broadcom: the custom-chip franchiseBroadcom is the company building many of those alternatives. Its AI semiconductor revenue reached $16.7 billion in the fiscal third quarter of 2026 (ended Aug. 2), 221% higher than a year earlier -- and still accelerating, with growth of 54% from the prior quarter alone. Custom accelerators (chips designed with a single customer) made up 73% of it.

CEO Hock Tan told analysts earlier this month that Broadcom has secured the supply to double AI revenue to about $115 billion in fiscal 2027 -- and to $230 billion the year after.

The stock trades at about 18 times fiscal 2027's expected earnings. The four-year job here is delivery: a short list of AI labs and cloud giants taking billions of dollars of chips on schedule, year after year.

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Marvell: the aggressive betMarvell runs the same strategy at a fraction of Broadcom's scale. Revenue reached $2.7 billion in its fiscal second quarter of 2027 (ended Aug. 1), and data center revenue grew 46%.

And CEO Matt Murphy now expects about $18 billion of revenue in fiscal 2028, up from around $12 billion this fiscal year, with the custom business more than doubling along the way.

Marvell is also the most expensive of the four, at about 33 times its expected fiscal 2028 earnings. That price-to-earnings multiple only works if the design wins behind those forecasts keep ramping on time.

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Micron: the cheapest, and the most cyclicalMicron sells the memory all of that AI hardware depends on, and right now that is arguably the supply chain's most profitable place. Revenue in its fiscal third quarter of 2026 (ended May 28) came to $41.5 billion, over four times the year-earlier total. Its non-GAAP (adjusted) gross margin reached 84.9%, up from 39% a year earlier. And guidance for the fiscal fourth quarter, which ended in early September, calls for about $50 billion of revenue.

Yet at about $928 as of this writing, shares cost only about 6 times analysts' fiscal 2027 earnings estimates, the group's lowest price-to-earnings multiple by far. In other words, investors are already betting these margins shrink. After all, memory prices have cycled for decades, and I think some of that doubt is fair.

Selling a business earning at this level seems premature. But this deep into memory's profitable stretch, I wouldn't put new money in at today's price, either.

The ones I'd buy todayWhich of these, then, would I buy and hold through 2030?

Nvidia and Broadcom are my anchors. Both sit where the supply chain's most durable profits appear to be. And both can grow into their prices if most of the demand they have guided for shows up.

Marvell is a buy as well, though I'd keep it the smallest of the three, because more of its growth still has to convert from bookings into revenue.

Of course, if AI spending turns down hard before 2030, all four stocks could fall together, whatever their valuation multiples. All four fell between 5% and 10% in a single week this month, so a four-year holder should expect stretches far worse than that. I'd buy Nvidia, Broadcom, and Marvell today. Micron, I view as a hold.

After several years of massive gains, many key semiconductor companies sold off over the course of this past summer. Even though Broadcom's (AVGO +0.07%) earnings beat estimates in 2026's second quarter, management's revenue guidance disappointed investors who were already feeling broadly uncertain about the outlook for the chip sector.

Nonetheless, rapid top- and bottom-line growth and high valuations have driven Broadcom higher by almost 600% over the last five years. That has undoubtedly changed its investment thesis, and similar points apply to other chip stocks.

With all that in mind, here's one chipmaker investors should consider buying now, one they should hold, and one I think it's time to sell.

Image source: Getty Images.

The stock to buy: Nvidia It may surprise investors to see Nvidia (NVDA +0.81%) being labeled a buy. Although the company's graphics processing units (GPUs) played a crucial role in making the latest phase of the AI revolution possible, its stock is also up by nearly 1,800% from the cyclical low it hit in October 2022. That could lead investors to assume it has become overvalued.

That is actually not the case, and growth is the reason. Four years ago, before the so-called "ChatGPT moment" in late 2022, Nvidia reported just $6.7 billion in quarterly revenue and had grown by only 3% over the previous year. Fast-forward to its most recent quarter, and revenues had reached $96.2 billion and increased by 106% over the previous year.

Given that level of growth, the stock's gains are understandable. Also, dramatically higher earnings have reduced its P/E ratio to just 28, despite the gains.

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Considering the pace of its revenue and earnings growth, the stock appears undervalued today, though new buyers would have to contend with concerns. A forecast that its revenue growth will fall to 65% may sour some investors on the stock, even though that's still rapid growth, objectively speaking. Also, given its $5.3 trillion market cap and $303 billion in trailing-12-month revenues, the law of large numbers is making higher growth in percentage terms a more difficult feat to achieve.

Still, even if a severe AI sector bust were to occur, Nvidia's potential downside seems limited. Forecasts at least indicate that it is not too late to buy Nvidia stock.

Nvidia's situation is substantially different from that of Advanced Micro Devices (AMD +1.65%). AMD also makes GPUs, and has emerged as one of Nvidia's most prominent competitors in the AI accelerator space. Thanks in part to optimism about its ability to grow that part of its business, AMD stock rose by over 790% since October 2022.

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Although Nvidia has long maintained a huge market share lead in that niche of the chip business, AMD's release of the MI450 and Helios rack system could change the competitive dynamics.

AMD also differs from Nvidia in that its data center business provided just 57% of its revenue in the first two quarters of 2026, compared to 92% for Nvidia. AMD continues to earn considerable revenues from its client, gaming, and embedded segments, which may not grow as quickly as the data center segment. 

Across that more diversified business, AMD's revenues rose 44% year over year in the first half of 2026 to almost $22 billion -- an impressive result, but one that nonetheless lagged Nvidia's growth rate.

Despite that comparative slowness, AMD's trailing P/E ratio is 132, and its forward P/E stands at 68. That may not be low enough to reassure investors who are concerned about the possibility of a slowdown in the AI infrastructure build-out. The potential for that might appear greater given recent calls for AI developers to slow their efforts down as well.

Lower data center spending could severely affect AMD stock. However, even with fears that AI model developers are losing control of AI, the technology is unlikely to disappear, and AMD should continue to benefit. Knowing that, holding this stock is likely the best course of action right now.

The stock to sell: Qualcomm A sell call on Qualcomm (QCOM -1.58%) may seem surprising at first. The company's remedy for its stagnant chipset business may be the new data center chips it recently unveiled. That hardware has already drawn interest from hyperscalers Meta Platforms and Amazon. Also, trading at a P/E ratio of 21, it looks comparatively cheap.

Unfortunately, it may actually be cheap for a reason. Qualcomm's chipset business has not benefited from AI as much as one would have expected. Even though smartphone makers like Apple are in the midst of an upgrade cycle, Qualcomm's handset revenue shrank by 9% annually in the first nine months of its fiscal 2026 (a period that ended June 26) as macroeconomic conditions weigh on smartphone sales. Moreover, Apple is shifting away from using Qualcomm's smartphone modems -- the iPhone maker is switching to in-house chips. That's expected to cut Qualcomm's sales to Apple by about half sequentially in the December quarter.

To this end, Qualcomm has pivoted more of its focus to the aforementioned data center chips, as well as to the Internet of Things and automotive sectors. Unfortunately, these are areas where it may not have much of a competitive advantage. Its automotive sector increased its revenue by 39% annually in the first three quarters of its fiscal 2026. However, that was not enough to entirely offset sales declines elsewhere in the business, leaving its overall revenues down by 1%.

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Admittedly, it is not too late for Qualcomm to mount a comeback, and for that reason, investors should keep watching it. Still, until it regains its footing, investors would likely be best served to do that watching from the sidelines.

SAN JOSE, Calif.--(BUSINESS WIRE)---- $CDNS #AIforDesign--Cadence (Nasdaq: CDNS) today announced that its Tensilica IP Group and Analog Devices, Inc. (ADI) worked together to develop the latest generation of SHARC® automotive audio processors, further strengthening ADI's industry-leading position in premium in-vehicle audio solutions. The joint effort brings Cadence's highly optimized Tensilica DSP architecture into the next-generation ADSP product family from ADI, enabling richer audio experiences, enhanced voice in.

Cadence Design Systems, Inc. (CDNS) Goldman Sachs Communacopia + Technology Conference 2026 September 9, 2026 1:50 PM EDT

Company Participants

Anirudh Devgan - CEO, President & Director

Conference Call Participants

James Schneider - Goldman Sachs Group, Inc., Research Division

Presentation

James Schneider
Goldman Sachs Group, Inc., Research Division

Good morning, everybody. Welcome to the Goldman Sachs Communacopia Technology Conference. I'm Jim Schneider, the semiconductor analyst here at Goldman Sachs. It's my pleasure to welcome Cadence and CEO, Anirudh Devgan, to the stage today. Welcome, Anirudh. Thanks for...

Anirudh Devgan
CEO, President & Director

Thank you. Thank you. Great to be here.

James Schneider
Goldman Sachs Group, Inc., Research Division

I've been asked to read a safe harbor to begin. Today's discussion will contain forward-looking statements, including Cadence's outlook on future business and operating results. Due to risks and uncertainties, actual results may differ materially from those projected or implied in today's discussion.

With that out of the way, let's get rolling.

Question-and-Answer Session

James Schneider
Goldman Sachs Group, Inc., Research Division

So first question for you, maybe high level. I mean, I think Cadence has had a very strong first half of the year with double-digit growth across pretty much every product group, record backlog, two increases to full year guidance. Before we get into individual businesses, how would you characterize what's changed in customer behavior over, say, the last 12 months?

Anirudh Devgan
CEO, President & Director

Yes. Thank you for the question. I mean the customer environment is probably the strongest I have seen. Because last few years, of course, some companies were doing phenomenally well, the big AI companies or the hyperscalers, but some of them were not. But if you look at it in '26, universally, the industry is doing great. The semi companies are doing great and then all the system companies, hyperscalers, the commitment to silicon is the strongest

Investors often turn to recommendations made by Wall Street analysts before making a Buy, Sell, or Hold decision about a stock. While media reports about rating changes by these brokerage-firm employed (or sell-side) analysts often affect a stock's price, do they really matter?

Before we discuss the reliability of brokerage recommendations and how to use them to your advantage, let's see what these Wall Street heavyweights think about Cadence Design Systems (CDNS - Free Report) .

Cadence currently has an average brokerage recommendation (ABR) of 1.39, on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell, etc.) made by 23 brokerage firms. An ABR of 1.39 approximates between Strong Buy and Buy.

Of the 23 recommendations that derive the current ABR, 18 are Strong Buy and one is Buy. Strong Buy and Buy respectively account for 78.3% and 4.4% of all recommendations.

Brokerage Recommendation Trends for CDNS

Check price target & stock forecast for Cadence here>>>

While the ABR calls for buying Cadence, it may not be wise to make an investment decision solely based on this information. Several studies have shown limited to no success of brokerage recommendations in guiding investors to pick stocks with the best price increase potential.

Are you wondering why? The vested interest of brokerage firms in a stock they cover often results in a strong positive bias of their analysts in rating it. Our research shows that for every "Strong Sell" recommendation, brokerage firms assign five "Strong Buy" recommendations.

This means that the interests of these institutions are not always aligned with those of retail investors, giving little insight into the direction of a stock's future price movement. It would therefore be best to use this information to validate your own analysis or a tool that has proven to be highly effective at predicting stock price movements.

With an impressive externally audited track record, our proprietary stock rating tool, the Zacks Rank, which classifies stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), is a reliable indicator of a stock's near-term price performance. So, validating the Zacks Rank with ABR could go a long way in making a profitable investment decision.

ABR Should Not Be Confused With Zacks RankAlthough both Zacks Rank and ABR are displayed in a range of 1--5, they are different measures altogether.

Broker recommendations are the sole basis for calculating the ABR, which is typically displayed in decimals (such as 1.28). The Zacks Rank, on the other hand, is a quantitative model designed to harness the power of earnings estimate revisions. It is displayed in whole numbers -- 1 to 5.

It has been and continues to be the case that analysts employed by brokerage firms are overly optimistic with their recommendations. Because of their employers' vested interests, these analysts issue more favorable ratings than their research would support, misguiding investors far more often than helping them.

In contrast, the Zacks Rank is driven by earnings estimate revisions. And near-term stock price movements are strongly correlated with trends in earnings estimate revisions, according to empirical research.

In addition, the different Zacks Rank grades are applied proportionately to all stocks for which brokerage analysts provide current-year earnings estimates. In other words, this tool always maintains a balance among its five ranks.

Another key difference between the ABR and Zacks Rank is freshness. The ABR is not necessarily up-to-date when you look at it. But, since brokerage analysts keep revising their earnings estimates to account for a company's changing business trends, and their actions get reflected in the Zacks Rank quickly enough, it is always timely in indicating future price movements.

Is CDNS a Good Investment?In terms of earnings estimate revisions for Cadence, the Zacks Consensus Estimate for the current year has remained unchanged over the past month at $8.12.

Analysts' steady views regarding the company's earnings prospects, as indicated by an unchanged consensus estimate, could be a legitimate reason for the stock to perform in line with the broader market in the near term.

The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #3 (Hold) for Cadence. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

It may therefore be prudent to be a little cautious with the Buy-equivalent ABR for Cadence.