Synopsys shares fall despite earnings beat and raised 2026 outlook

Investing.com --Synopsys shares fell in extended trading on Wednesday despite the chip-design software maker delivering third-quarter results above Wall Street expectations and raising its full-year outlook, as investors appeared to focus on the limited upside in its latest forecasts.

Despite the beats, the muted reaction suggests investors were looking for a stronger outlook relative to elevated expectations after Synopsys’ recent run of better-than-expected results. Shares had gained in the weeks leading into the report as optimism around the earnings release increased.

The company reported adjusted earnings of $3.91 per share, beating analysts’ estimate of $3.67, while revenue rose 42.4% year over year to $2.477 billion, topping the $2.44 billion consensus. Revenue was $1.740 billion in the same quarter last year.

The results were driven by broad-based strength across the business, led by Design Automation, while Ansys posted a strong quarter and Design IP returned to year-over-year growth. Synopsys said accelerating AI adoption is increasing chip-design complexity and driving demand for its engineering and silicon IP products.

For the fourth quarter, Synopsys forecast adjusted earnings of $4.10 to $4.16 per share, above the $3.99 analyst consensus, while revenue of $2.53 billion to $2.58 billion brackets the $2.552 billion consensus estimate.

The company also raised its fiscal 2026 adjusted earnings forecast to $15.04 to $15.10 per share, compared with analysts’ estimate of $14.77, and expects revenue of $9.69 billion to $9.74 billion, versus consensus of $9.677 billion.

The company said its financial targets assume no further changes to U.S. export controls or current Entity List restrictions, leaving trade policy and semiconductor-industry conditions as potential risks to its outlook.

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