Financial report preview | AI wave ignites chip design demand Synopsys, Inc. (SNPS.US) Q2 revenue expected to increase by over 40%

Chip automation design giant Synopsys, Inc. (SNPS.US) will announce its fiscal second quarter 2026 earnings after the U.S. stock market closes on May 27 (Wednesday). The market currently expects Synopsys, Inc.'s second quarter revenue to increase by 40.3% year-on-year to $2.25 billion, and Non-GAAP earnings per share to decrease by 13.6% year-on-year to $3.17. Synopsys, Inc. is benefiting from the expansion of the multi-trillion dollar artificial intelligence (AI) infrastructure, which is driving the demand for complex AI semiconductors and advanced design tools. The adoption of Synopsys, Inc.'s AI-driven EDA suite Synopsys.ai by chip manufacturers and suppliers is expected to be a major driver of revenue growth in the second quarter. In addition, the widespread application of AI, Internet of Things (IoT), 5G, and cloud technologies is expected to drive demand. The significant design investments by automotive companies in Synopsys, Inc.'s ARC processors, as well as strong adoption of interface security solutions such as CXL, PCI Express, and DDR, are expected to support its second quarter performance. With its strong product portfolio, Synopsys, Inc. is expected to benefit from strong order growth momentum and revenue visibility. The acquisition of Ansys has enabled Synopsys, Inc. to bridge the gap between digital design and physical design, create cross-selling potential, and drive revenue growth. However, weak performance in consumer electronics, automotive, and industrial markets - where design initiation demand remains tepid - is expected to be a "headwind" for Synopsys, Inc.'s second quarter performance. Additionally, Synopsys, Inc.'s intellectual property (IP) business is currently in a transitional phase, with delays in the delivery of some IP products and execution challenges related to collaborations with hyperscale cloud service providers potentially dragging down the company's overall growth in the second quarter. Furthermore, ongoing macroeconomic challenges and unfavorable exchange rate fluctuations, as well as tightening corporate budgets, are expected to partially offset the positive impact of the above-mentioned growth drivers.