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With a market cap of $81.6 billion, Cadence Design Systems, Inc. (CDNS) is a leading electronic design automation (EDA) software and semiconductor IP company that provides tools, hardware platforms, and intellectual property used to design, verify, and manufacture complex integrated circuits and electronic systems. Founded in 1988 and headquartered in San Jose, California, Cadence serves semiconductor, hyperscale computing, automotive, aerospace/defense, and consumer electronics customers worldwide.
Shares of this EDA giant have underperformed the broader market over the past year. CDNS has gained 1.9% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 12.9%. In 2026, CDNS stock is down 7.8%, compared to the SPX’s marginal dip on a YTD basis.
Narrowing the focus, CDNS has outpaced the SPDR S&P Software & Services ETF (XSW), which has declined about 23.5% over the past year and 20.6% fall in 2026
Cadence Design Systems has trailed the broader market over the past year primarily due to multiple compressions across high-growth semiconductor design software names. Investor rotation into cyclical and mega-cap AI hardware beneficiaries reduced relative flows into EDA software, while rising interest-rate sensitivity on long-duration growth stocks also weighed on valuation. In addition, moderating semiconductor design activity at some customers and digestion after several years of outsized EDA spending growth led to more normalized bookings expectations, tempering sentiment despite continued solid revenue and margin execution.
For FY2025 that ended in December, analysts expect CDNS’ EPS to grow 25.8% to $5.66 on a diluted basis. The company’s earnings surprise history is mixed. It beat or matched the consensus estimate in three of the last four quarters while missing the forecast on another occasion.
Among the 23 analysts covering CDNS stock, the consensus is a “Strong Buy.” That’s based on 17 “Strong Buy” ratings, one “Moderate Buy,” and five “Holds.”
This configuration is more bullish than three months ago, with 16 “Strong Buy” suggestions for the stock.
On Dec. 22, Needham analyst Charles Shi reiterated a “Buy” rating on Cadence Design Systems and maintained a $390 price target, underscoring continued confidence in the company’s execution and growth outlook.
The mean price target of $383.33 represents a 32.9% premium to CDNS’ current price levels. The Street-high price target of $410 suggests an ambitious upside potential of 42.2%.
On the date of publication, Kritika Sarmah did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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