Synopsys raises 2026 outlook as AI chip spending lifts design software demand

On Wednesday, Synopsys announced an increase in its full-year revenue and earnings guidance, a sign of the billions being spent on AI making their way down to the software that powers the chip design.

The California company, whose software is part of almost every high-end chip that is being developed, added that the increasing use of AI has forced its clients to create more complex chips on tighter schedules.

The implications are not restricted to one earnings report. Synopsys plays an important role in the AI supply chain: before chips from companies such as Nvidia or AMD or a hyperscaler’s proprietary program reach a fabrication plant, they usually go through electronic design automation software developed by Synopsys or a competitor like Cadence.

Thus, an improved outlook from Synopsys can indicate the level of expenditure by companies developing the next-generation AI infrastructure.

AI demand pushes the forecast higher

As per data published in its third quarter results, Synopsys has revised its expected revenues in the fiscal year 2026 to between $9.69 billion to $9.74 billion, thus increasing the previous range on both sides where $9.71 billion was the upper limit. Adjusted earnings estimate for the company has also gone up from earlier $14.72-$14.80 per share to $15.04-$15.10 per share.

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