Synopsys, Inc. (SNPS) saw its shares decline 1.49% on Friday to close at $502.42, capping a weekly loss of 2.72%. The chip-design software maker was caught in a broad technology selloff that dragged down the Nasdaq Composite by 1.54% and the Philadelphia semiconductor index by 4%. The weakness was compounded by a regulatory filing showing that hedge fund Coatue Management reduced its stake in Synopsys by 54.01% during the first quarter, leaving it with 761,760 shares valued at approximately $302 million at quarter-end.
The broader market also suffered on Friday, with the S&P 500 falling 1.24% and the Dow Jones Industrial Average declining 1.07%. Rising oil prices and bond yields added to the pressure. “The market had gotten way ahead of itself,” said Kenny Polcari, chief market strategist at Slatestone Wealth, in comments to Reuters.
Despite the weekly decline, Synopsys shares remain up 6.96% year-to-date, reflecting ongoing investor interest in the company’s role in the artificial intelligence (AI) chip spending cycle. Synopsys provides electronic design automation (EDA) software, essential tools used by chip engineers before manufacturing. Rival Cadence Design Systems also fell 1.59% on Friday, adding to the sector’s woes.
Looking ahead, all eyes are on Synopsys’ fiscal second-quarter results, scheduled for release after the market close on Wednesday, May 27. The company has guided for revenue in the range of $2.225 billion to $2.275 billion and non-GAAP earnings per share between $3.11 and $3.17. An earnings call is set for 5 p.m. Eastern.
Analyst sentiment ahead of the report has been mixed. Wells Fargo raised its price target on Synopsys to $505 from $450 while maintaining an Equal Weight rating. Citigroup analyst Kelsey Chia reiterated a Buy rating and lifted the target to $600 from $580. These adjustments reflect cautious optimism about the company’s near-term performance.
Synopsys’ long-term outlook remains tied to its pending acquisition of Ansys, which is expected to contribute $2.9 billion to the company’s full-year revenue forecast of $9.61 billion. In its first-quarter results, Synopsys posted revenue of $2.409 billion and non-GAAP EPS of $3.77, while reiterating its full-year guidance. CEO Sassine Ghazi noted that “AI continues to fuel robust system-level and semiconductor R&D,” and CFO Shelagh Glaser highlighted “strong execution and financial discipline.”
However, risks remain. Synopsys has stated that its targets assume no new export-control regulations. In February, the company flagged headwinds from China export curbs, a slowdown in new chip designs, and weak demand from a major foundry. A weaker-than-expected guidance, slow integration of Ansys, or another selloff in AI-related stocks due to rising interest rates could pressure the stock after the May 27 report.
For now, Synopsys shares are moving more on positioning, macroeconomic jitters, and anticipation of earnings rather than company-specific news. The Friday decline was a significant blow to the week’s performance, and the upcoming quarterly results may provide the next catalyst for direction.
