Goldman Sachs initiates Cadence Design stock with Buy rating on growth outlook
Investing.com
Published Jul 10, 2025 06:20AM ET
Investing.com - Goldman Sachs initiated coverage on Cadence Design Systems (NASDAQ:CDNS) with a Buy rating and set a price target of $380.00, representing potential upside from the current price of $322.91. According to InvestingPro data, the stock is trading near its 52-week high of $330.09, with analyst targets ranging from $200 to $365.
The investment bank views Cadence as "one of the most high-quality compounding businesses" in its coverage universe, citing the company's exposure to multiple growth drivers throughout the semiconductor industry. This assessment aligns with the company's impressive 85.86% gross profit margins and robust revenue growth of 19.55% over the last twelve months.
Goldman Sachs analyst James Schneider highlighted Cadence's long-term growth potential, which he believes will be driven by the expansion of custom chip design across a broader range of customers. InvestingPro analysis reveals 15+ additional insights about Cadence's financial health, which has received a "GREAT" overall rating.
The firm specifically noted that these customers have an "outsized need for IP," suggesting strong demand for Cadence's intellectual property offerings in the semiconductor design space.
Despite the positive outlook, Goldman Sachs acknowledged "ongoing potential headline risk from China export restrictions" that could affect the company's business operations in that market.
In other recent news, Cadence Design Systems announced the tape-out of the industry's first LPDDR6/5X memory IP solution, designed to operate at speeds up to 14.4Gbps. This development targets AI, mobile, and cloud data center markets, addressing growing demands for bandwidth and capacity. The company also reported that the U.S. Department of Commerce's Bureau of Industry and Security has rescinded export license requirements for certain electronic design automation software when dealing with Chinese entities, restoring access to affected technologies. Additionally, Cadence expanded its collaboration with Samsung (KS:005930) Foundry through a new multi-year IP agreement, focusing on AI-driven design flows for advanced process nodes. This partnership aims to enhance solutions for AI data centers and automotive applications. In collaboration with NVIDIA (NASDAQ:NVDA), Cadence will provide engineering design solutions for the world's first industrial AI cloud, optimized for NVIDIA's Grace Blackwell computing architecture. This cloud platform is expected to significantly accelerate performance for European industrial sectors. Furthermore, Cadence is seeking clarification on new U.S. export controls to China, which could impact software and technology transactions involving Chinese military end users. The company continues to experience strong global business momentum despite these regulatory changes.
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Written By: Investing.com
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