Arm Holdings and Qualcomm Head to Federal Trial Over Billions in Royalty Payments

HSBC upgraded Synopsys to Buy from Hold on September 25 and raised its price target from $490 to $700, implying a multiple of nearly 35 times HSBC's fiscal 2027 EPS estimates. Analyst Frank Lee said the company is evolving beyond its traditional slow-growth software profile as its licensing-plus-royalty model and agentic AI tools create a new path to benefit from AI. The upgrade follows Synopsys' fiscal third-quarter results, when revenue rose 42% to $2.48 billion, including approximately $711 million from Ansys, alongside higher full-year guidance. Synopsys announced a multiyear agreement worth more than $1 billion with Amazon on September 30, combining IP licensing with production-linked royalties, though the company has said revenue synergies from Ansys will not begin until fiscal 2027. The stock trades at approximately 61 times the midpoint of management's fiscal 2027 GAAP EPS guidance, or roughly 28 times adjusted earnings, and carries about $7 billion more debt than cash, largely tied to the Ansys deal.

Synopsys unveiled a major agreement with Amazon covering its intellectual property across custom silicon programs including Trainium, Graviton and Nitro, alongside a partnership with OpenAI to develop GPT-Synopsys, a specialized AI model for semiconductor design. The Amazon deal introduces a royalty-based component tied to chip production. Management also issued a stronger-than-expected outlook, projecting fiscal 2027 revenue of $11.10–$11.20 billion, above the roughly $10.81 billion analysts had expected, and non-GAAP earnings guidance of $19.04–$19.12 per share versus prior consensus near $17.81. The company now targets roughly 15% annual revenue growth through fiscal 2030, with operating margins approaching 50% and annual adjusted EPS growth in the mid-20% range, and intends to repurchase approximately $1 billion in shares over the coming months with a longer-term goal of returning up to 50% of free cash flow to shareholders. Synopsys currently holds a Zacks Rank #1 (Strong Buy), and over the last 60 days the consensus earnings estimate has risen 6.1% to $18.26 per share, with five upward revisions and one downward revision.

Cadence Design Systems is positioned to potentially beat earnings estimates again when it reports on October 26, 2026, according to Zacks Investment Research. The chip-design software maker has topped consensus estimates in each of its last two quarters, with an average surprise of 3.59%. In the most recent quarter, Cadence reported earnings of $2.11 per share against an expected $2.05, a surprise of 2.93%, following a prior-quarter surprise of 4.26% when it posted $1.96 per share versus a $1.88 consensus. The stock currently carries a Zacks Earnings ESP of +0.56% and a Zacks Rank #2 (Buy), a combination Zacks research shows produces a positive surprise nearly 70% of the time.

Empyrean Technology announced that it plans to invest 149 million yuan to acquire 9.269142 million shares of X-Epic held by Shengshi Zhida. Upon completion of the transaction, Empyrean Technology will hold a 6.90% equity stake in X-Epic, making it an associated company. The company said the investment aims to fill a key gap in placement and routing EDA tools and accelerate the construction of a full-flow EDA tool system for digital circuit design.

Rapidus, which aims to mass-produce advanced semiconductors, announced on the 5th that it will partner with 17 semiconductor design-related companies in Japan and abroad, including Toshiba. The partners include Toshiba Information Systems, a Toshiba subsidiary, as well as Dai Nippon Printing, TOPPAN, and major U.S. semiconductor design firms Synopsys and Cadence Design Systems. The aim is to strengthen its support system spanning everything from the design to the manufacturing of advanced semiconductors in line with customer needs, thereby winning more orders. Going forward, it plans to work with its partners to support customers' semiconductor design and increase the volume of production contracted to Rapidus.