Cadence Lifts Annual Forecast on AI Tailwinds
Synopsis
The company expects stronger 2026 revenue as rising AI chip development fuels demand for its design software.
Key Highlights
- Cadence Design Systems increased its revenue outlook for FY2026 to US$6.26 billion-US$6.34 billion and adjusted earnings forecast of US$8.05-US$8.15 per share.
- The bullish outlook was due to strong demand for its AI-enabled chip design software.
- After-hours shares climbed over 5%.
Cadence Design Systems raised its full-year revenue outlook to US$6.26 billion-US$6.34 billion from US$6.13 billion-US$6.23 billion and raised its adjusted earnings outlook to US$8.05-US$8.15 per share from US$7.85-US$7.95. Demand for its AI-powered chip and system design software continued to be healthy, the company said. Among its customers are Nvidia and Apple.
This month, Cadence also debuted AuraStack, an AI super agent, with the goal of allowing engineers to describe design goals in natural language before subsequently planning and conducting chip layout and virtual testing using the vendor’s existing software tools.
Growth in AI Chip Design Demand
Cadence is electronic design automation (EDA) software to design and validate semiconductors and electronic systems.
The company said demand increased because more advanced system-on-chips (SoCs) and artificial intelligence accelerators are being designed by chipmakers and technology companies.
The new revenue guidance is higher than the average analyst estimate of US$6.21 billion, based on LSEG data, and the adjusted earnings outlook beats estimates for US$7.96 per share.
Strong Second-Quarter Results
Cadence’s second-quarter revenue was US$1.584 billion, a 24.2% year-on-year increase that was generally in line with analysts’ forecast for the period.
You had adjusted earnings at US$2.11 a share above estimates of US$2.05 per share. The backlog of orders at the end of the quarter was US$8.1 billion, including US$4.2 billion to be recognised as revenue within 12 months.
Source: Reuters
At Inspirepreneurs Magazine, covering entrepreneurship, business failures, and the human stories behind the world's most ambitious founders. She writes at the intersection of strategy and storytelling.
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