Synopsys beats Q3 forecasts and lifts 2026 guidance as AI demand strengthens

Synopsys beats Q3 forecasts and lifts 2026 guidance as AI demand strengthens

Fiona Craig

Thu, August 27, 2026 at 1:10 PM GMT+3 2 min read

• SNPS -4.79%

Synopsys delivered third-quarter results ahead of Wall Street expectations and raised its fiscal 2026 outlook, supported by broad-based business growth and increasing demand linked to artificial intelligence. Shares nevertheless slipped around 2% in premarket trading on Thursday as investors assessed the degree of upside in the latest forecasts.

The market reaction followed gains in the weeks ahead of the results, when expectations had increased following a series of stronger-than-anticipated performances from the chip-design software specialist.

Synopsys reported adjusted earnings of $3.91 per share, exceeding the analyst estimate of $3.67. Revenue surged 42.4% year on year to $2.477 billion, ahead of the $2.44 billion consensus and up from $1.740 billion in the comparable quarter last year.

Design Automation and Ansys support growth

Performance was driven by strength across the group, led by Design Automation. Ansys also delivered a strong quarter, while Design IP returned to year-on-year growth.

Synopsys highlighted accelerating AI adoption as an important long-term growth driver. Increasingly sophisticated artificial intelligence workloads are adding complexity to semiconductor design, supporting demand for the company's engineering solutions and silicon intellectual property.

Bank of America analysts said the company's core growth is "improving into Investor Day but offset by muted backlog support."

The bank views Synopsys' Investor Day, scheduled for September 30, as a "key catalyst to drive higher confidence and potential multiple recovery."

Fourth-quarter guidance comes in ahead of earnings expectations

For the fourth quarter, Synopsys expects adjusted earnings of between $4.10 and $4.16 per share, comfortably above the Wall Street consensus of $3.99.

Revenue is projected at between $2.53 billion and $2.58 billion, placing the analyst consensus of $2.552 billion within the company's forecast range.

The outlook provides further evidence of continued underlying momentum as Synopsys benefits from growing semiconductor design requirements and expanding AI-related investment.

Synopsys raises full-year 2026 outlook

The company also upgraded its fiscal 2026 adjusted earnings forecast to between $15.04 and $15.10 per share, compared with the analyst estimate of $14.77.

Full-year revenue is now expected to reach between $9.69 billion and $9.74 billion, slightly ahead of the $9.677 billion market consensus.

Synopsys noted that its financial targets assume there are no additional changes to existing US export controls or Entity List restrictions. As a result, developments in trade policy and broader semiconductor industry conditions remain factors to monitor.

Despite the modest premarket decline, the combination of stronger quarterly earnings, rapid revenue growth, improving Design IP performance and higher full-year guidance highlights positive operational momentum ahead of the company's September Investor Day.

Synopsys stock price