AI chip design trend catalyzes performance explosion: Cadence Design Systems (CDNS.US) exceeds expectations in Q4, with a 25% surge in AI-driven IP business.

Global electronic design automation company Cadence (CDNS.US) released its fourth quarter and full-year financial report for fiscal year 2025 after the market closed on February 17, 2026 Eastern Time. The financial report showed that driven by the surge in chip design driven by artificial intelligence (AI), the company's performance exceeded market expectations. In the fourth quarter, revenue reached $1.44 billion, a year-on-year increase of 6.2%, slightly higher than analysts' previous expectations of $1.42 billion. In terms of profitability, the company's non-GAAP earnings per share (EPS) reached $1.99, exceeding market expectations of $1.91, demonstrating strong business resilience. Looking at the performance of the full fiscal year 2025, Cadence delivered solid growth. Total revenue for the year reached $5.297 billion, a significant increase of over 14% from $4.641 billion in fiscal year 2024. Non-GAAP EPS also increased from $5.97 in the previous year to $7.14, representing a year-on-year increase of approximately 20%. It is worth noting that the company's backlog of orders at the end of the fourth quarter reached a record $7.8 billion, reflecting strong demand in the market for electronic design automation (EDA) tools and IP business, and laying a solid foundation for performance certainty in 2026. On the DRIVE side of the business, AI, high-performance computing (HPC), and automotive electrification have become core growth engines for the company. Its intellectual property (IP) business recorded strong growth of nearly 25% in fiscal year 2025, mainly due to the demand for advanced physical IPs from AI chip accelerators and large-scale data centers. Cadence CEO Anirudh Devgan pointed out that the company's AI-driven design process, such as ChipStack AI Super Agent, is significantly improving customer productivity, allowing Cadence to maintain a leading position in market share competition with competitors such as Synopsys. Looking ahead, Cadence management is optimistic about the performance of fiscal year 2026 and has provided performance guidance above market expectations. The company expects revenue for fiscal year 2026 to be in the range of $5.9 billion to $6 billion, and the non-GAAP operating profit margin is expected to remain at a high level of 44.75% to 45.75%. In addition, based on strong cash flow performance, the company plans to use approximately 50% of its free cash flow for stock buybacks in 2026 to continue to reward shareholders and demonstrate confidence in long-term development.