Synopsys Outperforms With IP Sales Leading the Way Amid Rising Technical Complexity; FVE Up to $334

Narrow-moat Synopsys reported strong second-quarter results, with the top and bottom line exceeding both management’s and our at-consensus expectations. The firm significantly raised its full-year outlook for fiscal 2022, reflecting an outsize demand environment as consumer and business applications require both more chips and increasingly complex chips. We expect Synopsys to benefit from the increasing reliance on automation in design flows, with the firm’s DSO.ai solution finding increasing success within large customers, and enabling powerful cross-selling opportunities with the firm’s Fusion Design Platform.