Investing.com-- Elliott Investment Management has built a “multibillion-dollar” stake in Synopsys Inc (NASDAQ: SNPS), the Wall Street Journal reported on Sunday, citing people familiar with the matter.

Shares in the electronic design automation firm rose 2.5% in premarket trading by 05:01 ET.

The activist investor plans to push Synopsys to make more money from its software and services, the report said. The exact size of the stake was not immediately clear.

Elliott sees Synopsys as essential to the global chipmaking industry, and that the company is well-positioned to benefit from rapidly increasing chip demand in the artificial intelligence industry.

Wolfe Research analyst Joshua Tilton said that after multiple recent touchpoints with Synopsys, including the company’s Converge conference and a headquarters visit, he came away confident the firm has “launched the right products and put the right leadership in place to improve the organic growth of the business."

"We are not surprised that Elliot Management sees similar potential," he added.

"With SNPS shares trading at a 30%+ discount on revenue and 20%+ discount on earnings, there is a significant valuation gap to close," if Elliot can successfully help SNPS lift its growth in line with peer Cadence Design Systems, Tilton wrote.

Synopsys is a major supplier to Intel, Alphabet, and Tesla. Last year, AI major Nvidia had invested $2 billion in the chip software firm.