4 Top Cloud Electronic Design Automation (EDA) Stocks to Own in 2022
Cloud Electronic Design Automation (EDA) is a software tool that the semiconductor industry uses to design complex electronic systems. The growing need to integrate power electronics into smartphones, wearables, and smart home systems to facilitate remote lifestyles is expected to fuel the growth of the cloud EDA market.
Large-scale complex circuits developed and designed on the EDA cloud are used in precision industries such as aerospace, healthcare, automotive and defense equipment. Furthermore, significant breakthroughs in cloud computing, Internet of Things (IoT) and Artificial Intelligence (AI) technologies are expected to further increase the demand for cloud EDA software. According to a report by Report Ocean, the cloud EDA market is expected to grow at a pace 5.5% CAGR through 2026.
In this context, we think it might be a good idea to add some Synopsys Inc. grade EDA cloud actions (SNPS), Cadence Design Systems, Inc. (CDNS), Agilent Technologies, Inc. (A) and Keysight Technologies, Inc. (KEYS) to your wallet. These stocks look well positioned to capitalize on the industry’s growth.
Click here to view our Semiconductor Industry Report for 2022
Synopsys Inc. (SNPS)
Supplier of SNPS software products and services in Mountain View, California, provides electronic design automation software that engineers use to design and test integrated circuits. The company offers intellectual property products for semiconductors. It is also a provider of software tools and serves the electronics, financial services, automotive, medical and energy industries.
On December 22, 2021, SNPS announced that Juniper Networks has adopted its Synopsys OptoCompiler platform, including OptSim and PrimeSim HSPICE simulation solutions, to accelerate the development of photonic chips for the next generation of optical communications. Juniper plans to use SNPS solutions to design and optimize its hybrid silicon and optical InP platform.
SNPS revenue jumped 12.3% year-over-year to $1.15 billion for its fiscal fourth quarter, ended October 31, 2021. The company’s adjusted net income was $285.75 million. dollars, up 15.3% year-on-year. Additionally, its adjusted EPS rose 15.1% year-over-year to $1.82.
Analysts expect SNPS EPS for the quarter ending Jan. 31, 2022 to rise 55.9% year-over-year to $2.37. Its fiscal 2022 revenue is expected to grow 13.2% year-over-year to $4.76 billion. Additionally, it has exceeded Street’s EPS estimates in each of the past four quarters. Over the past nine months, the stock price has gained 31.2% to close yesterday’s session at $338.59.
The solid fundamentals of SNPS are reflected in its POWR Rankings. The stock has an overall A rating, which translates to a Strong Buy in our proprietary rating system. POWR ratings are calculated by considering 118 separate factors, with each factor weighted to an optimal degree.
It has an A rating for quality and a B rating for growth, stability and sentiment. SNPS is ranked first of 49 B-rated securities Technology-Material industry. Click here to see additional POWR odds for SNPS (Value and Momentum).
Cadence Design Systems, Inc. (CDNS)
CDNS provides solutions enabling its customers to design electronic products. the Based in San Jose, CA The Company’s product categories include Functional Verification, Digital IC Design and Approval, Custom IC Design and Verification, Systems Interconnect and Analysis, and Intellectual Property.
On November 17, 2021, CDNS announced that Samsung Foundry had qualified the 2D-to-3D native 3D partitioning stream of its Cadence Integrity 3D-IC platform. The new stream will allow customers to partition existing 2D designs into memory-on-logic 3D configurations and achieve greater power, performance, and area with a homogeneous 3D stack compared to the original 2D design.
For its third fiscal quarter, ended October 2, 2021, CDNS’s revenue increased 12.6% year-over-year to $751 million. The company’s non-GAAP net income was $221.57 million, up 12.4% year-over-year. Its non-GAAP EPS rose 14.2% year-over-year to $0.80.
For its 2022 fiscal year, analysts expect CDNS EPS to rise 13.4% year-over-year to $3.56. Its fiscal 2021 revenue is expected to increase 10.8% year-over-year to $2.97 billion. It has exceeded consensus EPS estimates in each of the past four quarters. The stock has gained 27.2% in price over the past year to close yesterday’s trading session at $170.18.
It’s no surprise that CDNS has an overall rating of B, which translates to a buy in our POWR rating system. It has an A rating for quality and a B rating for sentiment. It is ranked No. 25 out of 167 stocks in the Software app industry. To view additional CDNS ratings for Growth, Value, Momentum and Stability, Click here.
Agilent Technologies, Inc. (A)
Based in Santa Clara, CA A provides application-focused solutions that include instruments, software, services and consumables for the entire laboratory workflow. The company serves the life sciences, diagnostics and applied chemistry markets. Its segments include Life Sciences and Applied Markets, Diagnostics and Genomics, and Agilent CrossLab business.
On November 1, 2021, A unveiled its Agilent 6560C Ion Mobility LC/Q-TOF enhancements to the VWorks automation software suite and new AssayMAP high-capacity cartridges. These products will improve protein and peptide analysis to accelerate the development of new protein-based therapies in biopharmaceuticals.
A’s revenue increased 12% year-over-year to $1.66 billion in the fourth quarter ended October 31, 2021. The company’s non-GAAP net income increased 20.6% in year-over-year to reach $368 million. Additionally, its non-GAAP EPS rose 23.4% year-over-year to $1.21.
Analysts expect A’s FY2022 EPS and revenue to grow 11.3% and 7.1% year-over-year to $4.25 billion and $5.95 billion, respectively of dollars. Over the past year, the stock has gained 17.7% to close yesterday’s trading session at $149.51.
A’s strong fundamentals are reflected in its POWR ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. It has a B rating for value, stability, and quality. Within the Medical – Diagnosis/Research industry, it is ranked #3 out of 58 stocks. Click here to see Growth, Momentum, and Sentiment ratings.
Keysight Technologies, Inc. (KEYS)
Based in Santa Rosa, CA KEYS is a technology company that provides electronic measuring instruments, design and test software, and system-related services. The Company’s operating segments include Communications Solutions Group (CSG) and Electronics Industrial Group (EISG).
On November 30, 2021, KEYS launched its new Keysight P9002A parallel parametric test system, which provides high-throughput, cost-effective wafer testing to accelerate R&D time-to-market and reduce manufacturing test cost. The new parallel parametric test system addresses the technical challenges the industry faces in adapting to new materials, miniaturization and 3D packaging processes. It also helps manufacturers increase their capacity.
For its fiscal fourth quarter, ended October 31, 2021, KEYS’ orders increased 21.1% year-over-year to $1.49 billion. The company’s revenue increased 6% year-on-year to $1.29 billion. Additionally, its non-GAAP net income rose 10.8% year-over-year to $338 million. KEYS’ non-GAAP EPS was $1.82, representing a 12.3% year-over-year increase.
For the quarter ending April 30, 2022, KEYS EPS and revenue are expected to increase 13.9% and 6.9%, respectively, year-over-year to 1.64 billion and 1.29 billion of dollars. It has exceeded street EPS estimates in each of the past four quarters. Over the past nine months, the stock price has gained 31.2% to close yesterday’s trading session at $190.40.
KEYS’ strong fundamentals are reflected in its POWR ratings. It has an overall rating of B. which equates to a buy in our proprietary rating system. It has an A rating for quality and a B rating for stability and feeling. It is ranked #7 out of 45 stocks in the Technology – Electronics industry. Click here to see additional KEYS ratings for Growth, Value and Momentum.
SNPS shares were trading at $339.34 per share Thursday morning, up $0.75 (+0.22%). Year-to-date, the SNPS is down -7.91%, compared to a -0.70% rise in the benchmark S&P 500 over the same period.
About the Author: Dipanjan Banchur
Ever since he was in elementary school, Dipanjan had been interested in the stock market. This enabled him to obtain a master’s degree in finance and accounting. Currently, as an investment analyst and financial journalist, Dipanjan is particularly interested in reading and analyzing emerging trends in financial markets. Following…