Is Renewed China Sales and Raised Outlook Altering the Investment Case for Cadence Design Systems (CDNS)?

• Cadence Design Systems recently reported second quarter 2025 results, with adjusted EPS of US$1.65 and revenue of US$1.30 billion, both surpassing analyst expectations, while also raising annual guidance for both metrics.
• An important factor behind this performance was the resumption of sales to China after U.S. export restrictions were eased, with China accounting for 9% of second quarter sales.
• To understand how this renewed access to the Chinese market affects Cadence's outlook, we'll examine its implications for the company's investment narrative.

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Cadence Design Systems Investment Narrative Recap

To invest in Cadence Design Systems, you need to believe in the sustained demand for AI-driven design tools and robust customer partnerships that underpin future revenue growth. The recent news of resumed China sales following relaxed export restrictions has positively influenced short-term momentum, acting as a catalyst for the company's improved outlook, but it also serves as a reminder of the ongoing geopolitical risks that can quickly shift the outlook for this key market. Among the latest developments, Cadence’s expanded partnership with NVIDIA stands out, especially with the use of their Palladium Z3 platform for advanced power analysis in AI hardware. This collaboration strengthens Cadence’s advantage in the fast-evolving field of AI chip design, supporting the primary growth catalyst identified by many analysts. On the other hand, with renewed access to China, the risk of sudden regulatory shifts remains something investors should watch for, especially if...

Read the full narrative on Cadence Design Systems (it's free!)

Cadence Design Systems' outlook projects $6.9 billion in revenue and $1.7 billion in earnings by 2028. This scenario requires a 10.9% annual revenue growth rate and a $0.7 billion increase in earnings from the current $1.0 billion.

Uncover how Cadence Design Systems' forecasts yield a $369.57 fair value, a 5% upside to its current price.

Exploring Other Perspectives

Seven fair value estimates from the Simply Wall St Community place Cadence between US$169.73 and US$401.07 per share. While opinions are split, recent progress in AI partnerships continues to shape the conversation around Cadence’s future growth and resilience.

Explore 7 other fair value estimates on Cadence Design Systems - why the stock might be worth as much as 14% more than the current price!

Build Your Own Cadence Design Systems Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Cadence Design Systems research is our analysis highlighting 1 key reward that could impact your investment decision.
• Our free Cadence Design Systems research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Cadence Design Systems' overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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