tech
February 18, 2026
Cadence Design Systems shares pop on earnings beat, custom chip optimism
CEO Anirudh Devgan said he expects the trend of companies making their own custom chips to accelerate.
TL;DR
- Cadence Design Systems stock increased by more than 6% after reporting Q4 2025 earnings and revenue above analyst expectations.
- The company reported adjusted EPS of $1.99 and revenue of $1.44 billion for Q4 2025, year-over-year increases of approximately 6% in both metrics.
- Approximately 45% of Cadence's business now comes from "system companies," including hyperscalers and producers of phones and cars.
- CEO Anirudh Devgan stated that system companies are designing their own chips to optimize hardware and software stacks for specific workloads.
- This trend is fueled by artificial intelligence-related capital expenditures and R&D efforts across the tech industry.
- Devgan cited Apple's smartphone chips and Google's custom AI silicon as key examples, predicting the custom chip trend will accelerate.
- Cadence forecasts $5.9 billion to $6 billion in revenue for the next fiscal year, meeting the higher end of market expectations.
- The company competes with Synopsys and Siemens in the chip design software market.
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