Synopsys Design IP revenue up 11% in fiscal Q3 2026
Synopsys Design IP revenue rose 11% in the third quarter of fiscal 2026, reversing an 8.1% decline recorded across fiscal 2025. The company reported the increase in its fiscal Q3 results, attributing the growth to broad demand for AI infrastructure that drives chip makers toward faster connections and more complex systems.
Synopsys Design IP revenue rose 11% in the third quarter of fiscal 2026, reversing an 8.1% decline recorded across fiscal 2025. The company reported the increase in its fiscal Q3 results, attributing the growth to broad demand for AI infrastructure that drives chip makers toward faster connections and more complex systems.
Shares of Synopsys gained 30% over the past month, outpacing a 2.5% gain for the S&P 500. This performance followed the company's Investor Day on September 30 and the announcement of new deals with OpenAI and Amazon. Despite the recent climb, Synopsys stock remains 7.5% below its 52-week high. Over the last twelve months, the shares returned 12.7%, compared with a 21% return for the S&P 500.
Design IP generated $474 million in revenue during fiscal Q3 2026, representing a portion of the company's total $2.477 billion revenue for the period. In fiscal 2025, the segment accounted for 25% of total revenue, with Design Automation comprising the remainder. Management stated that die-to-die products, which connect separate chips within a single package, are on pace to double year over year. The company has secured more than 100 chip designs using these products.
During its fiscal Q3 call, management provided a long-term growth guide of mid-teens for the IP segment. The company indicated that higher growth opportunities exist with AI customers seeking IP shaped to their own chips. To address this, Synopsys is shifting from a licensing-only model to one that includes royalties, a strategy it refers to as Factory 2.
Synopsys shares currently trade at 88 times earnings, significantly above the S&P 500 multiple of 22.5. This valuation suggests that market expectations assume growth across the company, excluding specific reliance on the Design IP segment. If Design IP growth slows, Synopsys would need to rely on Design Automation to drive overall expansion.
The next key metric will be Design IP's year-over-year revenue growth in the fiscal Q4 2026 report. This figure will determine if the recent recovery establishes a sustained trend or if the segment faces renewed pressure following its prior decline.