Tech Stocks Shine: 2 Hidden Gems in the Chip Software Space
The tech sector continues to lead the stock market’s bullish momentum, with the NASDAQ index climbing 24% year-to-date. While industry giants like Nvidia have dominated headlines, Berenberg analyst Nay Soe Naing is highlighting two under-the-radar names in the chip software space that are poised for significant growth.
Synopsys: A Leader in Electronic Design Automation
Synopsys is a specialist in electronic design automation, focusing on silicon design, verification, and intellectual property. The company boasts a strong track record of innovation, enabling advancements in autonomous vehicles, machine learning, and high-speed communications. With over 35 years of experience and a team of over 19,000 employees, Synopsys is a big player in the industry.
Recent announcements demonstrate the company’s commitment to expansion and streamlining its business. Synopsys sold its optical solutions group to Keystone Technologies and entered into an agreement with TSMC, the world’s second-largest chip maker, to provide advanced EDA and IP solutions.
Naing initiates coverage of Synopsys with a Buy rating and a $660 price target, suggesting a potential 31% upside. The Strong Buy analyst consensus is unanimous, based on 10 recent reviews from the Street.
Cadence Design Systems: A Chief Competitor with a Bright Future
Cadence Design Systems is another key player in the electronic systems design industry, known for its software expertise and Intelligent System Design strategy. The company delivers top-notch software, hardware, and IP protections for a wide range of silicon-based technologies.
Cadence has made significant commitments, including entering the imecAutomotive chiplet program and integrating Nvidia NeMo and NIM microservices into its generative AI applications. On the financial side, the company saw 2Q24 revenues of $1.06 billion, beating expectations by $20 million.
Naing opens coverage of Cadence with a Buy rating and a $320 price target, indicating a potential 21.5% upside. The Moderate Buy consensus rating is based on 10 recent Wall Street reviews.
A Compelling Opportunity in the Chip Software Space
Both Synopsys and Cadence Design Systems offer attractive investment opportunities, driven by their solid industry positions, innovative products, and strong financials. With the chip software space poised for significant growth, these two hidden gems are worth considering for investors looking to tap into the tech sector’s momentum.
Leave a Reply