Is Synopsys (SNPS) Using Photonics Partnerships to Redefine Its Edge in AI Infrastructure Design?

• In late January 2026, Lightmatter announced a collaboration with Synopsys to integrate Synopsys’ 224G SerDes and UCIe IP for 3nm processes into its Passage 3D Co-Packaged Optics platform, aiming to improve bandwidth, latency and energy efficiency for advanced AI infrastructure.
• This pairing of Synopsys’ silicon-proven IP and AI-powered design tools with Lightmatter’s photonic architecture highlights how chip design and optics are converging to accelerate high-performance AI systems.
• Next, we’ll explore how this AI-focused collaboration and its emphasis on energy-efficient, high-bandwidth connectivity could influence Synopsys’ broader investment narrative.

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What Is Synopsys' Investment Narrative?

For Synopsys, you really have to believe that custom silicon and AI workloads keep pushing chipmakers toward tighter integration of compute, memory and optics, and that Synopsys’ tools and IP remain central to that shift. The Lightmatter collaboration fits neatly into this story, but it is unlikely to change the near term picture on its own, given Synopsys’ US$7,054.18 million revenue base and diversified customer set. The more immediate talking points still look like a rich valuation multiple, modest forecast growth, and a one off gain that flatters recent earnings quality, all against a share price that has lagged the wider market over the past year. The new co packaged optics angle slightly strengthens the AI connectivity and energy efficiency narrative, but it does not erase questions around pricing, return on equity and CEO pay.

However, one issue around profitability and management incentives is something investors should not ignore. Synopsys' share price has been on the slide but might be up to 27% below fair value. Find out if it's a bargain.

Exploring Other Perspectives

Six members of the Simply Wall St Community value Synopsys between about US$377.57 and US$555.65, highlighting very different expectations. Set that beside rich earnings multiples and softer recent returns, and you can see why it pays to examine several viewpoints before forming your own view on Synopsys’ longer term potential.

Explore 6 other fair value estimates on Synopsys - why the stock might be worth 21% less than the current price!

Build Your Own Synopsys Narrative

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

• A great starting point for your Synopsys research is our analysis highlighting 1 key reward and 2 important warning signs that could impact your investment decision.
• Our free Synopsys research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Synopsys' 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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