Investing.com -- Piper Sandler upgraded semiconductor design software maker Synopsys to Overweight from Neutral and raised its price target to $550 from $450, citing improving prospects for the company's intellectual property (IP) business as Intel's foundry ambitions gain traction.

The brokerage said sentiment around Intel's 18A-P and future 14A manufacturing nodes has improved significantly in recent months, creating a more favorable demand environment for Synopsys, which supplies design tools and IP used in advanced chip development. Piper believes renewed foundry activity could drive a faster-than-expected recovery in Synopsys' IP segment, historically tied to some of Intel's largest programs.

Analyst Clarke Jeffries pointed to recent reports that Apple may use Intel's manufacturing technology for certain future chips and that Google has selected Intel for roughly half of its TPU production through 2028. If those projects move forward, Piper expects they could spur new IP licensing and design activity benefiting Synopsys.

The firm also argued that persistent capacity constraints at leading-edge foundries have increased the strategic value of Intel's emerging manufacturing offerings, providing customers with an alternative to heavily utilized production capacity elsewhere. That shift could support broader semiconductor design activity and create incremental opportunities for Synopsys.

Piper raised its fiscal 2027 revenue forecast to $10.8 billion from $10.7 billion and increased its fiscal 2027 earnings-per-share estimate to $17.04 from $16.69. The new $550 target implies about 18% upside from the stock's recent price of $464.58.

The brokerage cautioned that upside depends on the scope of potential customer commitments to Intel's foundry business and noted that Intel's 14A process remains under development, making 18A-P-related activity the more important near-term catalyst. Key risks include heightened EDA competition, slower semiconductor R&D spending and global trade restrictions.