Synopsys (SNPS) Stock Surges 11% on OpenAI Partnership and Billion-Dollar Amazon Contract

Key Highlights

• Shares of Synopsys surged 11% to reach $483.59, leading the Nasdaq 100 index on Thursday.
• The chip design software firm unveiled GPT-Synopsys, an AI-powered chip design tool developed through a multiyear partnership with OpenAI.
• A custom chip collaboration with Amazon valued at over $1 billion was announced.
• Long-term revenue growth projections were upgraded to mid-teens percentage through fiscal year 2030.
• Wall Street firm Rosenblatt boosted its price target to $620, suggesting 43% potential upside from earlier trading levels.

Shares of Synopsys experienced a substantial 11% increase to $483.59 during early trading on Thursday, positioning the company as the leading gainer within the Nasdaq 100 index.

Synopsys, Inc., SNPS

This significant move followed a 4.8% advance from the previous session. Combined, these consecutive gains represent the company’s strongest two-day performance since September 2025.

The surge occurred after Synopsys hosted its Investor Day event in New York City on Wednesday, where management unveiled two significant AI-focused collaborations.

The first collaboration involves OpenAI. Together, they’re introducing GPT-Synopsys, a purpose-built artificial intelligence model designed specifically for semiconductor design applications.

While specific financial terms weren’t disclosed, both organizations confirmed the arrangement operates under a multiyear revenue-sharing framework.

According to Synopsys, discussions are already underway with leading semiconductor companies regarding adoption of this innovative tool.

Amazon Partnership Details

The second major announcement centers on Amazon. Synopsys has secured an agreement exceeding $1 billion in value to collaborate on Amazon’s custom semiconductor initiatives.

This arrangement builds upon Amazon’s current utilization of Synopsys software and intellectual property assets. Importantly, it introduces a different revenue structure.

The agreement employs a license-plus-royalty framework. This approach ensures revenue scales with production volume increases, rather than remaining static.

Both collaborations address a persistent concern among investors. There had been apprehension that artificial intelligence capabilities might enable chip manufacturers to internalize more design functions, potentially reducing demand for Synopsys solutions.

CFO Shelagh Glaser addressed these concerns directly in a Barron’s interview, stating: “Everybody’s building their own chips, and we have insatiable demand.”

Updated Financial Projections

Synopsys also enhanced its long-range financial outlook. The company now projects compound annual revenue growth in the mid-teens through fiscal 2030, an increase from the previous double-digit guidance.

Specifically for fiscal 2027, Synopsys anticipates approximately 15% revenue expansion. Additionally, management expects adjusted operating margins to improve to roughly 50% by fiscal 2030, up from an anticipated 44% in fiscal 2027.

The company has authorized approximately $1 billion in share repurchases in the near term, contingent on market conditions.

StoneX analyst Gary Mobley maintained his Buy rating with a $570 price objective. He emphasized that AI agents are designed to augment engineering workflows, not displace fundamental design platforms.

Rosenblatt Securities elevated its price target to $620 from $575 following the investor event. This represents 43% upside potential from the pre-rally price of $434.94.

Rosenblatt also highlighted Synopsys’ recent financial performance, noting 46% revenue growth over the trailing twelve months alongside an 83% gross margin.

Despite Thursday’s rally, Synopsys shares remained down 7.4% year-to-date entering the session. Competitor Cadence Design Systems had posted a 5.6% gain over the same period and added 6.1% on Thursday as well.

Glaser attributed the stock’s earlier underperformance to concerns about AI disruption and the ongoing integration of Ansys, which Synopsys acquired last year in a $35 billion transaction.

“We had said 2026 was going to be a transitional year,” Glaser noted, citing the Amazon agreement as validation of the company’s strategic direction.

Several other Wall Street firms have adopted increasingly positive stances recently. HSBC upgraded the stock to Buy with a Street-high $700 price target, while both Morgan Stanley and Baird have upgraded their ratings this year.