Synopsys, Inc. provides electronic design automation software products used to design and test integrated circuits. It operates in three segments: Design Automation, Design IP, and Software Integrity. The company offers Digital and Custom IC Design solution that provides digital design implementation solutions; Verification solution that offers virtual prototyping, static and formal verification, simulation, emulation, field programmable gate array (FPGA)-based prototyping, and debug solutions; and FPGA design products that are programmed to perform specific functions. It also provides intellectual property (IP) solutions for USB, PCI Express, DDR, Ethernet, MIPI, HDMI, and Bluetooth low energy applications; logic libraries and embedded memories; processor cores, software, and application-specific instruction-set processor tools for embedded applications; security IP solutions; IP solutions for automotive market; and system-on-chip (SoC) infrastructure IP, datapath and building block IP, and verification IP products, as well as mathematical and floating-point components, and Arm AMBA interconnect fabric and peripherals. In addition, the company offers HAPS FPGA-based prototyping systems; virtual prototyping solutions; and Platform Architect solutions for SoC architecture analysis and optimization, as well as optical products, and mechatronic simulations. Further, it provides security and quality testing products, managed services, programs and professional services, and training that enable its customers to detect and remediate security vulnerabilities, and defects in the software development lifecycle, as well as manufacturing solutions. Additionally, the company provides intelligent orchestration solution, software risk manager, and black duck software composition analysis tools. It serves electronics, financial services, automotive, medicine, energy, and industrial areas. The company was incorporated in 1986 and is headquartered in Sunnyvale, California.

Synopsys, Inc.

Investors considering a purchase of Synopsys Inc (Symbol: SNPS) shares, but tentative about paying the going market price of $597.15/share, might benefit from considering selling puts among the alternative strategies at their disposal. One interesting put contract in particular, is the January 2027 put at the $430 strike, which has a bid at the time of this writing of $21.20. Collecting that bid as the premium represents a 4.9% return against the $430 commitment, or a 3.5% annualized rate of return (at Stock Options Channel we call this the YieldBoost).
Selling a put does not give an investor access to SNPS's upside potential the way owning shares would, because the put seller only ends up owning shares in the scenario where the contract is exercised. And the person on the other side of the contract would only benefit from exercising at the $430 strike if doing so produced a better outcome than selling at the going market price. (Do options carry counterparty risk? This and six other common options myths debunked). So unless Synopsys Inc sees its shares fall 28.4% and the contract is exercised (resulting in a cost basis of $408.80 per share before broker commissions, subtracting the $21.20 from $430), the only upside to the put seller is from collecting that premium for the 3.5% annualized rate of return.
Below is a chart showing the trailing twelve month trading history for Synopsys Inc, and highlighting in green where the $430 strike is located relative to that history:
The chart above, and the stock's historical volatility, can be a helpful guide in combination with fundamental analysis to judge whether selling the January 2027 put at the $430 strike for the 3.5% annualized rate of return represents good reward for the risks. We calculate the trailing twelve month volatility for Synopsys Inc (considering the last 250 trading day closing values as well as today's price of $597.15) to be 40%. For other put options contract ideas at the various different available expirations, visit the SNPS Stock Options page of StockOptionsChannel.com.
In mid-afternoon trading on Thursday, the put volume among S&P 500 components was 957,084 contracts, with call volume at 957,084, for a put:call ratio of 0.71 so far for the day, which is above normal compared to the long-term median put:call ratio of .65. In other words, if we look at the number of call buyers and then use the long-term median to project the number of put buyers we'd expect to see, we're actually seeing more put buyers than expected out there in options trading so far today. Find out which 15 call and put options traders are talking about today.
AAT YTD Return
KeyCorp MACD
ULTI Historical Stock Prices
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Agree To Buy Synopsys At $430, Earn 4.9% Using Options

Below is Validea's guru fundamental report for SYNOPSYS INC (SNPS). Of the 22 guru strategies we follow, SNPS rates highest using our P/B Growth Investor model based on the published strategy of Partha Mohanram. This growth model looks for low book-to-market stocks that exhibit characteristics associated with sustained future growth.
SYNOPSYS INC (SNPS) is a large-cap growth stock in the Software & Programming industry. The rating using this strategy is 77% based on the firm’s underlying fundamentals and the stock’s valuation. A score of 80% or above typically indicates that the strategy has some interest in the stock and a score above 90% typically indicates strong interest.
The following table summarizes whether the stock meets each of this strategy's tests. Not all criteria in the below table receive equal weighting or are independent, but the table provides a brief overview of the strong and weak points of the security in the context of the strategy's criteria.
Detailed Analysis of SYNOPSYS INC
More Information on Partha Mohanram
About Partha Mohanram: Sometimes the best investing strategies don't come from the world of investing. Sometimes research that changes the investing world can come from the halls of academia. Partha Mohanram is a great example of this. While academic research has shown that value investing works over time, it has found the opposite for growth investing. Mohanram turned that research on its head by developing a growth model that produced significant market outperformance. His research paper "Separating Winners from Losers among Low Book-to-Market Stocks using Financial Statement Analysis" looked at the criteria that can be used to separate growth stocks that continue their upward trajectory from those that don't. Mohanram is currently the John H. Watson Chair in Value Investing at the University of Toronto and was previously an Associate Professor at the Columbia Business School.
Additional Research Links
About Validea: Validea is aninvestment researchservice that follows the published strategies of investment legends. Validea offers both stock analysis and model portfolios based on gurus who have outperformed the market over the long-term, including Warren Buffett, Benjamin Graham, Peter Lynch and Martin Zweig. For more information about Validea, click here
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Guru Fundamental Report for SNPS

Explore the exciting world of Synopsys (NASDAQ: SNPS) with our contributing expert analysts in this Motley Fool Scoreboard episode. Check out the video below to gain valuable insights into market trends and potential investment opportunities!
*Stock prices used were the prices of Jul. 23, 2025. The video was published on Aug. 15, 2025.
Should you invest $1,000 in Synopsys right now?
Before you buy stock in Synopsys, consider this:
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Synopsys wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $663,630!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,115,695!*
Now, it’s worth noting Stock Advisor’s total average return is 1,071% — a market-crushing outperformance compared to 185% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.
*Stock Advisor returns as of August 13, 2025
Anand Chokkavelu, CFA has no position in any of the stocks mentioned. Jose Najarro has no position in any of the stocks mentioned. Travis Hoium has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Synopsys. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Synopsys: A Strong Contender in the Semiconductor Software Market

Looking today at week-over-week shares outstanding changes among the universe of ETFs covered at ETF Channel, one standout is the JPMorgan Nasdaq Equity Premium Income ETF (Symbol: JEPQ) where we have detected an approximate $292.7 million dollar outflow -- that's a 1.0% decrease week over week (from 528,050,000 to 522,800,000). Among the largest underlying components of JEPQ, in trading today Synopsys Inc (Symbol: SNPS) is down about 0.1%, Analog Devices Inc (Symbol: ADI) is off about 1.8%, and Palo Alto Networks, Inc (Symbol: PANW) is lower by about 0.1%. For a complete list of holdings, visit the JEPQ Holdings page » The chart below shows the one year price performance of JEPQ, versus its 200 day moving average:
Looking at the chart above, JEPQ's low point in its 52 week range is $44.311 per share, with $58.54 as the 52 week high point — that compares with a last trade of $55.77. Comparing the most recent share price to the 200 day moving average can also be a useful technical analysis technique -- learn more about the 200 day moving average ».
Exchange traded funds (ETFs) trade just like stocks, but instead of ''shares'' investors are actually buying and selling ''units''. These ''units'' can be traded back and forth just like stocks, but can also be created or destroyed to accommodate investor demand. Each week we monitor the week-over-week change in shares outstanding data, to keep a lookout for those ETFs experiencing notable inflows (many new units created) or outflows (many old units destroyed). Creation of new units will mean the underlying holdings of the ETF need to be purchased, while destruction of units involves selling underlying holdings, so large flows can also impact the individual components held within ETFs.
Socially Responsible Preferreds
ETFs Holding UNFI
PRO Stock Predictions
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

JEPQ, SNPS, ADI, PANW: Large Outflows Detected at ETF

Cadence Design Systems CDNS stock has risen 24.6% over the past year, higher than the gains registered by the Computer-Software industry (up 23.1%), the broader Computer and Technology sector (up 24.2%) and the S&P 500 composite (up 17.5%).
Image Source: Zacks Investment Research
The company has gained 4.6% since July 28, when it reported better-than-expected second-quarter performance. The stock closed last trading session at $349.12, below its 52-week high of $376.45.
Does the pullback indicate a buying opportunity? Let us dive into CDNS’ pros and cons and determine the best course of action for your portfolio.
Cadence Has Multiple Tailwinds
AI is driving a major transformation in semiconductor and system design, and Cadence is deeply integrated into this shift. Secular growth drivers such as 5G, the rise of hyperscale computing and autonomous vehicles are further fueling design activity across the semiconductor and systems landscape.
The rapid adoption of Generative AI, Agentic AI and Physical AI is creating an exponential surge in computing needs and semiconductor innovation, an environment that plays to Cadence’s strengths. To seize this momentum, the company has been working closely with industry leaders like Qualcomm and NVIDIA on next-generation AI designs for both training and inference workloads. The company is also exploring new AI-driven markets, such as life sciences, through its OpenEye drug discovery software. In addition, Cadence is strengthening collaborations with foundry partners, including Taiwan Semiconductor Manufacturing, Intel and Arm Holdings.
Looking ahead, Cadence is poised to benefit from rising R&D spending by customers pursuing AI-driven automation. During the latestearnings call management emphasized that unifying its capabilities across EDA, IP, 3D-IC, PCB and system analysis is positioning the company to capture opportunities from the ongoing AI supercycle. Customer R&D investments, especially in AI, remain strong.
Cadence Design Systems, Inc. Price, Consensus and EPS Surprise
Cadence’s ratable software model, strong backlog and high mix of recurring revenues offer resilience amid macroeconomic volatility.
Demand for the new hardware systems, especially among AI and hyperscale clients, is the primary catalyst behind Core EDA’s business (which constitutes Custom IC, Digital IC and Functional Verification businesses) performance. Core EDA revenues grew 16% year over year in the second quarter. It also unveiled Cerebrus AI Studio, which is an agentic AI multi-block and multi-user SoC design platform. It offers up to 20% PPA improvement, while speeding up chip delivery time by five to 10 times. It was endorsed by Samsung and ST Microelectronics at launch.
The IP business benefited owing to a broadening silicon solutions portfolio and increasing demand for solutions in AI, HPC, foundry ecosystem buildout and chiplet use cases, with revenues from the segment up 25% year over year in the second quarter.
To strengthen IP business, the company announced the acquisition of Secure-IC, which will expand its IP portfolio, including interface, memory, AI and DSP solutions. In April 2025, Cadence signed a definitive agreement with Arm Holdings to acquire its Artisan foundation IP business. The acquisition includes a suite of standard cell libraries, memory compilers and general-purpose I/Os, all finely tuned for advanced process nodes at leading global foundries.
Driven by strong results and a strong pipeline, management upgraded its outlook for 2025. Revenues for 2025 are now estimated to be in the range of $5.21-$5.27 billion compared with $5.15-$5.23 billion guided earlier. Non-GAAP EPS for 2025 is expected to be between $6.85 and $6.95 compared with $6.73-$6.83 guided earlier.
Strong Cash Flow and Repurchases
As of June 30, 2025, Cadence had cash and cash equivalents of $2.823 billion and long-term debt was $2.478 billion. Operating cash flow was $378 million in the reported quarter, with free cash flow of $334 million. The company repurchased its shares worth $175 million in the second quarter. It expects to execute $200 million in repurchases in the third quarter. Management reaffirmed its commitment to return at least 50% of free cash flow via buybacks, enhancing shareholder returns.
Headwinds Remain a Concern for CDNS
Weakness prevailing over global macroeconomic conditions and substantial exposure to the semiconductor vertical are concerning. Any reduction in R&D spending for companies within the semiconductor sector could affect CDNS' top-line performance.
Higher operating costs and stiff competition in the EDA/AI space from the likes of Keysight Technologies and Synopsys SNPS are additional headwinds. The acquisition of ANSYS by Synopsys is likely to intensify competition in the EDA space for all players. SNPS completed the acquisition of ANSS in July 2025, creating a combined leader in silicon design, IP, and simulation and analysis.
The company generates a significant portion of its revenues from the international market. Revenues from international operations as a percentage of overall revenues have historically exceeded 50%. In 2024, the company derived 47% of revenues from the United States, while the balance came from its international operations. Hence, we expect any adverse foreign currency exchange rates to impede revenue growth.
Cadence stock is trading at a premium, with a forward 12-month Price/Earnings ratio of 46.83X compared with the industry’s 35.12X.
Image Source: Zacks Investment Research
Conclusion: Hold CDNS Stock for Now
Cadence, with its strong fundamentals, robust AI-driven demand and a resilient recurring revenue model, remains a compelling opportunity. The company’s prominent position in the EDA space and strategic partnerships with tech giants like NVIDIA and Qualcomm position it well for long-term growth. However, macro uncertainty, intense competition and stretched valuation remain valid concerns.
At present, CDNS carries a Zacks Rank #3 (Hold).
For investors already holding shares, the story remains compelling, but for new entrants, it may be wise to wait for a better entry point.
Stocks to Consider
Better-ranked stocks worth consideration in the same industry space are Intuit Inc. INTU and Microsoft Corporation MSFT, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for INTU’s fiscal 2025 earnings is pegged at $20.06, unchanged in the past seven days. Intuit’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 12.15%. Its shares have risen 9% in the past year.
The Zacks Consensus Estimate for MSFT’s fiscal 2026 earnings is pegged at $15.32, unchanged in the past seven days. Microsoft’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 7.02%. The company’s long-term earnings growth rate is 14.9%. Its shares have advanced 23.6% in the past year.
7 Best Stocks for the Next 30 Days
Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."
Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.5% per year. So be sure to give these hand picked 7 your immediate attention.
See them now >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

CDNS Stock Gains 25% in a Year: Stay Invested or Book Profits?

(RTTNews) - Ansys, part of Synopsys (SNPS) and NVIDIA signed an agreement to license, sell, and support Omniverse technology embedded in Ansys simulation solutions. Through its integration of NVIDIA Omniverse, Ansys will deliver easy access to Omniverse technologies and libraries to customers, starting with its CFD and autonomous solutions.
Rev Lebaredian, vice president of Omniverse and simulation at NVIDIA, said: "Combining the predictive power of Ansys solvers with NVIDIA simulation technologies and libraries is a turning point for industries striving to simulate reality with precision."
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Ansys Integrates NVIDIA Omniverse Capabilities Into Its Products

Key Points
Momentum seemed to be building for The Trade Desk in July before the stock plunged on its earnings report.
The stock rose 7% after it was added to the S&P 500.
Digital advertising demand remains strong, but The Trade Desk faces concerns about competition.
The Trade Desk (NASDAQ: TTD) stock tumbled on its second-quarter earnings report, but prior to that, the leading independent demand-side platform (DSP) had been building momentum through July into the earnings report.
According to data from S&P Global Market Intelligence, the stock finished July up 21%. As you can see from the chart below, the stock took several steps higher over the course of the month.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »
Let's take a look at that performance before discussing the company's earnings miss last week.
The Trade Desk joins the S&P 500
The Trade Desk got off to a strong start in July as Citigroup raised its price target to $90 and added to its 90-day catalyst watch.
The big news in the month for The Trade Desk was that it was tapped to join the S&P 500. The stock jumped 7% on July 15 after the news came out. The index announced that it would replace Ansys with The Trade Desk on July 18, as Ansys was acquired by Synopsys.
The addition by the S&P 500 is a bullish signal because it shows that the high-profile index manager believes The Trade Desk is worth including in the 500 companies that best represent the American stock market, and because it forces ETFs that track the index to buy the stock.
Following that announcement, the stock continued to march higher as several analysts raised their price targets and as digital advertising leaders like Alphabet and Meta Platforms reported strong quarterly results, showing advertising demand is robust.
Why the stock tumbled on earnings
Despite that momentum heading into earnings, the stock plunged on Aug. 8 after the company reported results.
Headline numbers were in line with expectations as revenue rose 19% to $694 million, which was ahead of $686 million. On the bottom line, adjusted earnings per share rose from $0.39 to $0.41, which matched estimates.
However, guidance called for revenue to decelerate, driving fears that the company was struggling with competition. Additionally, the company said CFO Laura Schenkein would step down to be replaced by Alex Kayyal, a longtime board member at The Trade Desk and a former Salesforce executive.
A number of Wall Street analysts downgraded the stock on the report, citing competitive and execution concerns as well as its high valuation.
The Trade Desk called for revenue growth of just 14% in the third quarter, which would be the slowest rate in its history, with the exception of a brief dip when the pandemic started. Given that, the investor caution around the stock seems warranted.
Should you invest $1,000 in The Trade Desk right now?
Before you buy stock in The Trade Desk, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and The Trade Desk wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $653,427!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,119,863!*
Now, it’s worth noting Stock Advisor’s total average return is 1,060% — a market-crushing outperformance compared to 182% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.
*Stock Advisor returns as of August 11, 2025
Citigroup is an advertising partner of Motley Fool Money. Jeremy Bowman has positions in Meta Platforms and The Trade Desk. The Motley Fool has positions in and recommends Alphabet, Meta Platforms, Salesforce, Synopsys, and The Trade Desk. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Why The Trade Desk Jumped 21% in July Before Tumbling in August

Key Points
Synopsys' recent acquisition of Ansys is a game-changer, positioning the company ahead of a fundamental shift in its end markets.
Its core business is growing strongly, and the addition of Ansys should expand its customer base and the value of its overall offering.
Management's growth targets make the stock a good value.
Electronic design automation (EDA) solutions company Synopsys (NASDAQ: SNPS) recently completed its long-awaited acquisition of engineering simulation software company Ansys. The deal was completed shortly after the company received the remaining approval it needed (from China) to make the acquisition. It's an exciting deal that promises to put the new Synopsys ahead of the curve in adopting increasingly complex artificial intelligence (AI)-led product design. That could result in a significant amount of value being generated for shareholders in the future.
Synopsys' growing end markets
The company's core activity is EDA, which involves software and hardware that help customers design, verify, and manufacture integrated circuits. As such, its traditional end-market customers are semiconductor and electronics companies. However, that's only part of the story, because the ever-increasing integration of chips into products and their increasing complexity means Synopsys is selling to industries such as defense, automotive, data centers, consumer electronics, healthcare, and industrial companies, among others.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »
The integrated circuits/chips are not just systems designed with a fixed and permanent end in mind; they are constantly interacting with their environment and driven by AI-powered interaction.
Consequently, the complexity of integrated circuits/chips is increasing as AI applications place increasing stress on them, driving EDA sales, whether through increased sales to traditional customers (semiconductor companies) or new end-market customers, as outlined above.
How Ansys will boost growth
The Ansys deal not only deepens Synopsys' relationships with existing customers of both companies but also enhances the value of each company's solutions by being sold as part of a single entity. This has the potential to accelerate Synopsys' growth in the new customer bases discussed above.
Ansys makes engineering simulation software used to model how a product will behave in the real world. As such, it currently has a much broader range of customers than Synopsys has at present. However, many of its existing customers are likely to become potential customers for EDA due to the trends discussed previously.
Synopsys aims to offer customers a "silicon to systems" solution whereby Synopsys EDA solutions can help design products and Ansys software can analyze their performance. This leads to the potential for engineers to iteratively design a product using EDA and continuously draw on data from Ansys simulation software. This should reduce the development time and cost of a product and improve its quality -- a critical requirement at any time, and even more important in an age of increasing complexity.
It's a powerful combination, and it's why management believes the acquisition will lead to these long-term objectives:
Double-digit revenue growth
Non-GAAP operating margins in the mid-40% range, and long-term free-cash-flow (FCF) margin in the mid-30% range
Non-GAAP earnings-per-share growth in the high-teens range
Is Synopsys a millionaire-maker stock?
Wall Street analysts have the combined company generating $10.4 billion in revenue in 2026, and conservatively plugging in 10% annual revenue growth for the next decade would take Synopsys to $27 billion in revenue. With a 35% FCF conversion (in line with the assumptions above), the company could generate approximately $9.5 billion in FCF over the next decade. Presuming it continues to grow earnings at a double-digit rate, such a stock could be priced at 25 times FCF -- in other words, $238 billion, compared to the current market cap of $113.8 billion.
While that provides a decent return over the decade, it's hardly a millionaire-maker return. That said, making more optimistic assumptions will produce better outcomes (for example, assuming 19% annual revenue growth on the same basis would lead to $518 million in market capitalization).
All told, Synopsys isn't a stock that will turn ordinary investors into millionaires, but it can produce excellent returns and provides a backdoor way to play the AI spending trend, as well as the explosion in growth in semiconductors embedded in everyday devices.
Should you invest $1,000 in Synopsys right now?
Before you buy stock in Synopsys, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Synopsys wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $636,628!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,063,471!*
Now, it’s worth noting Stock Advisor’s total average return is 1,041% — a market-crushing outperformance compared to 183% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.
*Stock Advisor returns as of July 28, 2025
Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Synopsys. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Is Synopsys Stock Your Ticket to Becoming a Millionaire?

Key Points
A deal between Autodesk and PTC would have made good strategic sense.
The industrial software space is rapidly consolidating as the creation of digital threads and loops using data generated by software increases.
PTC's solutions lie at the heart of the adoption of digital technology in manufacturing.
PTC (NASDAQ: PTC) investors were treated to a flurry of excitement in July as, according to reports, its larger peer Autodesk (NASDAQ: ADSK) took a serious look at acquiring the company only to appear to back off any such large undertakings by issuing a regulatory filing stating it was "allocating capital to organic investment, targeted and tuck-in acquisitions." Is the fun over, or are there more surprises to come?
PTC doesn't need Autodesk
The market had no doubt about its opinion on the speculation. Autodesk shares tumbled on the day Bloomberg discussed the potential bid, while PTC stock naturally soared. This is somewhat common in such situations, and is often driven by hedge funds engaging in so-called merger arbitrage. Hedge funds often look to sell shares in the acquiring company short while buying shares in the target company, and then make money when the spread between the two stocks closes when the deal is completed.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »
However, the interesting thing about the price action is that Autodesk's stock has somewhat recovered after the SEC filing was issued on July 14, but PTC's stock has remained relatively high.
Perhaps I've been spending too much time with the Oracle at Delphi, but it looks like the market is asking the question of "who's next to try and buy PTC?"
Why PTC is a highly attractive asset
It's a valid question, not least because there's been significant consolidation in the industrial software space over the last year. For example, German industrial and software giant Siemens bought Altair Engineering for $10 billion earlier this year to add Altair's strength in simulation and analysis software (computer-aided engineering, or CAE) to its core product lifecycle management (PLM), computer-aided design (CAD), and electronic design automation (EDA) strengths.
Not to be outdone, Synopsys (the market-leading EDA company) recently completed the acquisition of CAE company, and Altair rival, Ansys.
At which point readers are no doubt tired of the acronyms and wondering what it all means to PTC investors.
Why PTC can be part of the industrial software consolidation
A combination of Autodesk and PTC makes obvious sense, as it marries Autodesk's leadership in CAD with PTC's expertise in PLM to create an American champion better able to compete with France's Dassault Systèmes and Germany's Siemens. The two Europeans are leading players in the CAD/PLM/CAE space.
It's not just about adding acronyms; it's a reflection of the increasingly important interaction between design (CAD) and the digital management of a product through PLM, CAE, in the so-called digital loop.
For example, CAE modeling data can be fed back into PLM, and actionable conclusions can be drawn from it that lead to adjustments in a product's design using CAD, such as improving factory productivity or enhancing a product's reliability and quality.
As such, even if Autodesk/PTC is off the table, a larger software company looking to enter the industrial space can be interested, and there's always the possibility that an automation company -- like PTC's partner and former stakeholder, Rockwell Automation, or, thinking longer-term, Honeywell (not least as Honeywell Automation will be a separate company in future) or Emerson Electric (a company focusing on automation and industrial software) -- might consider making a move.
PTC is an excellent buy anyway
In any case, PTC doesn't need takeover speculation to be an attractive stock. Despite headwinds in its industrial end markets, the company has consistently generated double-digit growth in its annual run rate of software subscriptions. Moreover, it's likely to continue growing in the future as customer adoption of digital technology increases and the volume of valuable data created expands (through the use of digital twins, CAE, service lifecycle management software, etc.).
All of that data needs a hub and a repository, which is where PLM comes in. As such, PTC's solutions are an integral part of the modern manufacturing world. With Wall Street expecting ARR improvement to drop into double-digit free cash flow growth for the foreseeable future, PTC is an excellent option for a diversified growth portfolio, whether it receives a bid or not.
Should you invest $1,000 in PTC right now?
Before you buy stock in PTC, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and PTC wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $636,628!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,063,471!*
Now, it’s worth noting Stock Advisor’s total average return is 1,041% — a market-crushing outperformance compared to 183% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.
*Stock Advisor returns as of July 21, 2025
Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Autodesk, Emerson Electric, PTC, Rockwell Automation, and Synopsys. The Motley Fool recommends Dassault Systèmes Se. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.