Cadence Design Systems CDNS
Cadence Design Systems is a software company that designs electronic design automation (EDA) tools and intellectual property solutions for clients to design advanced chips and electronic systems. Cadence shows exceptional growth (revenue +24.2%, earnings +125.4%) and a very high quality moat (ROE 23.23%, gross margin 85.87%), but its valuation is very demanding (P/E 64.97) and earnings growth may be at a cyclical peak.
Detailed metrics
Market and fundamental data as of the analysis date.
Full AI report
Generated automatically from the metrics, the macro context and the company's news.
Cadence Design Systems is a software company that designs electronic design automation (EDA) tools and intellectual property solutions for clients to design advanced chips and electronic systems. Cadence shows exceptional growth (revenue +24.2%, earnings +125.4%) and a very high quality moat (ROE 23.23%, gross margin 85.87%), but its valuation is very demanding (P/E 64.97) and earnings growth may be at a cyclical peak.
Score by category
| Category | Score |
|---|---|
| Financial health | 7.7 |
| Quality / Moat | 8.4 |
| Valuation | 2.4 |
| Growth | 8.8 |
| Dividend | 1.5 |
| Momentum | 5.6 |
| Risk & Context | 5.2 |
OVERALL SCORE: 6.1/10
Context and risks
The rise in 10-year Treasury yields (5.17%) and geopolitical risk premium affect long-duration growth valuations like CDNS (P/E 64.97). However, its solid balance sheet (ND/EBITDA 0.52) mitigates the impact on its financial health.
News considered in the analysis
- Cadence Design Systems (CDNS) Unveils AI RTL Generation Agent — Refuerza la posición de Cadence en el diseño de chips asistido por IA, un factor clave de crecimiento, aunque el impacto en beneficios a corto plazo es limitado.
- The Zacks Analyst Blog Highlights ExxonMobil, Automatic Data Processing and Cadence Design, BranchOut Food — Menciones genéricas en blogs de analistas sin información nueva o específica sobre la empresa.
- Cadence Design Systems (CDNS) Outperforms Broader Market: What You Need to Know — Comentario de movimiento de mercado sin información fundamental nueva.
- Top Analyst Reports for ExxonMobil, Automatic Data Processing & Cadence — Informes de analistas sin detalles específicos o cambios de recomendación material.
- How Much Could You Make If Synopsys Stock Rebounds From Here? — Artículo sobre un competidor sin implicación directa para Cadence.
Verdict: Hold. Business quality is outstanding, but the current valuation already discounts very optimistic growth and is sensitive to rising interest rates.
Main risk: The main risk is the extreme valuation (P/E 64.97) and the possibility that the 125.4% earnings growth is not sustainable, which could lead to a significant correction if AI spending slows down.
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