Shares of Synopsys (NASDAQ: SNPS) climbed 11% to $483.59 in early Thursday trading, making the chip design software maker the strongest performer in the Nasdaq 100 for the session. The advance came on top of a 4.8% gain on Wednesday, and the two consecutive sessions marked the company's strongest two-day stretch since September 2025.

The momentum originated from Synopsys' Investor Day presentation, held in New York on Wednesday, where the company unveiled two significant AI-focused strategic partnerships: a multiyear agreement with OpenAI and a custom chip development contract with Amazon valued at more than $1 billion. Synopsys is one of the largest providers of electronic design automation (EDA) software, which engineering teams rely on to design and verify chips before they are manufactured. Investor day events are typically where companies present long-term strategy and financial targets directly to analysts and institutional investors, which helps explain why the market treated the announcements as more than a routine product update.

GPT-Synopsys: an AI Model for Chip Design Built With OpenAI

The first collaboration centers on GPT-Synopsys, a purpose-built artificial intelligence model designed specifically for semiconductor design applications. Specific financial terms were not disclosed, but both organizations confirmed that the arrangement operates on a multiyear revenue-sharing framework, meaning Synopsys' economics from the partnership depend on how widely the tool is actually adopted rather than on a fixed upfront payment.

According to Synopsys, discussions are already underway with leading semiconductor manufacturers regarding adoption of the new design tool. No customers have been named yet, making the outcome of those discussions an early indicator of whether the partnership moves from announcement to production use.

Amazon Deal Worth Over $1 Billion

The second major announcement involves Amazon. Synopsys secured an agreement valued above $1 billion to collaborate with the company on proprietary chip development. The arrangement builds on Amazon's current use of Synopsys software platforms and intellectual property assets, and it represents a fundamental change in how Synopsys is compensated: the contract employs a license-plus-royalty framework, meaning revenue will scale proportionally with manufacturing volume rather than remaining static. In practice, that ties a portion of Synopsys' revenue from the relationship to real-world chip production at Amazon rather than to one-time license fees.

Both collaborations address a persistent concern that has shadowed Synopsys recently. Market participants had expressed anxiety that AI capabilities might enable chip manufacturers to internalize more design functions, potentially reducing demand for the company's services. That same AI-disruption worry was among the factors Glaser later cited for the stock's underperformance this year.

Chief Financial Officer Shelagh Glaser dismissed those concerns in a conversation with Barron's. "Everybody's building their own chips, and we have insatiable demand," she said.

Elevated Growth Projections

Synopsys also upgraded its forward-looking financial targets. The company now anticipates midteens compound annual revenue growth through the end of fiscal 2030, an increase from its earlier double-digit projection. For fiscal 2027 in particular, Synopsys forecasts revenue growth of approximately 15%. It also projects that adjusted operating margin will climb to roughly 50% by fiscal 2030, compared with the 44% expected in fiscal 2027. Together, those targets give investors specific checkpoints for judging whether the new partnerships convert into financial results over the coming years.

Management additionally announced plans to repurchase approximately $1 billion worth of shares in the coming months, contingent upon market conditions. Share repurchases return capital to shareholders and shrink the outstanding share count, though the company framed the program as contingent rather than guaranteed.

Analysts Raise Targets

StoneX analyst Gary Mobley maintained his Buy recommendation and $570 price objective, noting that AI agents are designed to assist engineers rather than displace fundamental design platforms.

Rosenblatt Securities elevated its price target to $620 from $575 following the investor presentation. The new target represents 43% upside potential from the stock's pre-rally price of $434.94. Rosenblatt also highlighted Synopsys' recent operational performance, noting 46% revenue growth over the trailing twelve months alongside an 83% gross margin.

Other analysts have adopted more optimistic positions as well. HSBC upgraded the stock to Buy with a street-leading $700 price target, while both Morgan Stanley and Baird raised their ratings during the current year. Such targets reflect individual analysts' estimates rather than company guidance.

Shares Still Down Year to Date

Despite Thursday's rally, Synopsys stock remained down 7.4% year to date entering the session. Competitor Cadence Design Systems has posted a 5.6% gain over the same period and also climbed 6.1% on Thursday.

Glaser attributed the stock's previous underperformance to concerns about AI-driven disruption and the ongoing integration of Ansys, which Synopsys acquired last year in a $35 billion transaction. That integration remains in progress, giving investors a second execution thread to track alongside the newly announced partnerships.

"We had said 2026 was going to be a transitional year," Glaser explained, citing the Amazon partnership as evidence that the strategic plan is materializing.

Source: Blockonomi