What Synopsys (SNPS)’s Q3 Miss and Legal Scrutiny Mean for Shareholders

• In the past week, Synopsys reported its third quarter 2025 results, which missed prior guidance due to underperformance in its IP business, export restrictions, and challenges linked to a major foundry customer, leading to legal investigations and heightened risk scrutiny.
• Amid these setbacks, Synopsys also announced key collaborations with TSMC and a new digital twin educational initiative, highlighting its ongoing innovation and integration of advanced simulation tools with partners like NVIDIA.
• We'll examine how Synopsys's recent earnings disappointment and legal scrutiny may reshape its investment narrative and risk outlook.

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Synopsys Investment Narrative Recap

To believe in Synopsys as a shareholder, you need confidence in its ability to remain the innovation engine powering complex chip and system design, particularly as industries shift toward AI, multi-die architectures, and advanced simulation. The recent Q3 earnings miss and subsequent legal scrutiny have cast a spotlight on short-term risks, especially the revenue and earnings uncertainty tied to export restrictions and reliance on a major foundry customer. These setbacks are material and could affect both the key near-term catalyst, Ansys integration driving growth, and the most significant risk: customer concentration.

Among recent developments, Synopsys' broadened partnership with TSMC stands out, as their certified EDA flows and multi-die solutions for advanced nodes reinforce the company's mission-critical position in next-generation chip production. While this collaboration strengthens long-term opportunities in AI chips and 3D-IC, the near-term volatility in IP and export-focused business lines means the earnings reset places added importance on execution within these growth initiatives.

Yet, against this backdrop, investors should recognize unresolved legal and compliance investigations may weigh on Synopsys's outlook...

Read the full narrative on Synopsys (it's free!)

Synopsys is projected to achieve $12.1 billion in revenue and $2.7 billion in earnings by 2028. This outlook assumes a 24.7% annual revenue growth rate and a $1.3 billion increase in earnings from $1.4 billion today.

Uncover how Synopsys' forecasts yield a $556.40 fair value, a 18% upside to its current price.

Exploring Other Perspectives

Seven members of the Simply Wall St Community estimate Synopsys's fair value between US$419 and US$556 per share. With recent revenue and earnings resets linked to customer concentration risks, you can see how views on Synopsys's prospects vary widely.

Explore 7 other fair value estimates on Synopsys - why the stock might be worth 11% less than the current price!

Build Your Own Synopsys 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 Synopsys research is our analysis highlighting 1 key reward and 3 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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