tech
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.