Cadence Design (CDNS) AI Stock Analysis

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Cadence Design

(NASDAQ:CDNS)

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Rating:71Outperform

Price Target:$356.00▲(8.12% Upside)

Action:reiterated

Date:10/27/26

The score is driven primarily by strong financial performance (high margins, solid free cash flow, and improving leverage) and a notably upbeat earnings call with raised guidance and record backlog. Offsetting factors are a very high valuation multiple and a mixed technical picture with negative MACD and the stock below several key moving averages.

Positive Factors

Recurring platform modelCadence’s subscription, maintenance, and support model provides recurring revenue and better visibility than purely transactional software sales. Deep integration across design, verification, signoff, and packaging workflows also raises switching costs, supporting renewals and customer expansion.

Negative Factors

Export-control exposureCadence’s financial outlook depends partly on export-control rules remaining broadly unchanged, making international customer access and revenue assumptions vulnerable to regulatory shifts. A materially tighter regime could reduce demand, delay transactions, or complicate serving affected customers.

Cadence Design Key Performance Indicators (KPIs)

Revenue by GeographyBreaks down revenue across different regions, revealing where Cadence Design is strongest and where it may face risk or growth potential due to local economic conditions or market share shifts.

Chart Insights

Cadence's growth is now genuinely global — Americas remains the backbone but Asia has surged to near‑parity driven by AI/HPC and hardware demand (matches management's best‑ever hardware quarter and large IP/EDA wins), while EMEA and Japan both picked up in 2025–Q1 2026. That broadening reduces single‑market risk but short‑term volatility remains: management flagged China lumpiness and export‑control sensitivity, and Hexagon's 2026 revenue adds near‑term mix and margin noise before expected accretion in 2027.

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The Fly

Cadence Design (CDNS) vs. SPDR S&P 500 ETF (SPY)

Market Cap: $90.34B
Dividend Yield: ―
Average Volume (3M): 2.43M
Price to Earnings (P/E): 65.1
Beta (1Y): 1.36
Revenue Growth: 17.64%
EPS Growth: 29.69%
Country: US
Employees: 13,800
Sector: General
Sector Strength: 55
Industry: Software - Application

Cadence Design Business Overview & Revenue Model

Company Description

Cadence Design Systems, Inc. operates globally, delivering a comprehensive suite of solutions that includes software, specialized hardware, professional services, and pre-designed integrated circuit (IC) building blocks. The company's robust function...

How the Company Makes Money

Cadence primarily makes money by licensing software and delivering related support and services, supplemented by sales and licensing of semiconductor IP. 1) Software licensing (primary revenue stream) - Time-based licenses (subscription/term): Cadenc...

Cadence Design Earnings Call Summary

Earnings Call Date:Oct 26, 2026(Q3-2026)|% Change Since:2.20%|Next Earnings Date:Feb 23, 2027

Earnings Call SentimentPositive

The call was strongly positive, with record backlog, 22% Q3 revenue growth, raised 2026 guidance, broad-based product growth, accelerating Agentic AI adoption, and strong customer and hardware momentum. The main caveats were the sequential moderation in recurring revenue growth, higher hardware inventory, hardware quarter-to-quarter lumpiness, the near-term margin effect of the Hexagon D&E integration, and the outlook's export-control assumption.

Positive Updates

Record Backlog and Raised Full-Year Outlook

Backlog reached a record $8.2 billion, reflecting strong bookings and growing customer demand. Cadence raised its 2026 revenue outlook to 21% growth and increased its EPS outlook by $0.30 to $8.40.

Negative Updates

Recurring Revenue Growth Moderated Sequentially

Recurring revenue growth was 18% year over year in Q3, compared with 20% cited for the prior quarter. Management said the comparison was affected by specific China revenue movements, with that revenue not present this year.

Company Guidance

Cadence raised its revenue outlook for the year to 21% growth and its EPS outlook by $0.30 to $8.40; for 2026, it expects revenue in the range of $6.387 billion to $6.417 billion, GAAP operating margin in the range of 28.2% to 29.2%, Non GAAP operating margin in the range of 44.2% to 45.2%, GAAP EPS in the range of $4.84 to $4.90, Non-GAAP EPS in the range of $8.37 to $8.43, operating cash flow of approximately $2 billion, and to use more than 50% of its free cash flow to repurchase Cadence shares in 2026; at the midpoint, it expects revenue growth of 21%, operating margin of 44.7%, and EPS of $8.40. For Q4, it expects revenue in the range of $1.695 billion to $1.725 billion, GAAP operating margin in the range of 30% to 31%, Non GAAP operating margin in the range of 44% to 45%, GAAP EPS in the range of $1.23 to $1.29, and non GAAP EPS in the range of $2.19 to $2.25, assuming export control regulations that exist today remain substantially similar for the remainder of the year.

Cadence Design Financial Statement Overview

Summary

Strong fundamentals: steady revenue growth through 2025 with TTM up ~5%, best-in-class gross margin (~88.5%), and high EBITDA margin (~36.3%). Free cash flow is robust (~$1.76B, up ~5.1%) with solid earnings quality, and the balance sheet has improved leverage vs. equity (debt/equity ~0.27). Key watch items are recent margin softening (EBIT/net margin below prior peaks) and weaker TTM operating cash flow conversion vs. net income (~0.80x).

Income Statement

88Very Positive

Balance Sheet

82Very Positive

Cash Flow

79Positive

Financial statement breakdown
Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	6.13B	5.30B	4.64B	4.09B	3.56B	2.99B
Gross Profit	5.25B	4.57B	3.99B	3.65B	3.19B	2.68B
EBITDA	2.36B	1.87B	1.67B	1.46B	1.20B	916.12M
Net Income	1.38B	1.11B	1.06B	1.04B	848.95M	695.96M
Balance Sheet
Total Assets	12.22B	10.15B	8.97B	5.67B	5.14B	4.39B
Cash, Cash Equivalents and Short-Term Investments	1.45B	3.00B	2.78B	1.14B	886.82M	1.09B
Total Debt	2.81B	2.48B	2.59B	764.41M	887.41M	454.71M
Total Liabilities	5.35B	4.68B	4.30B	2.27B	2.39B	1.65B
Stockholders Equity	6.88B	5.47B	4.67B	3.40B	2.75B	2.74B
Cash Flow
Free Cash Flow	1.76B	1.59B	1.12B	1.25B	1.12B	1.03B
Operating Cash Flow	1.97B	1.73B	1.26B	1.35B	1.24B	1.10B
Investing Cash Flow	-2.33B	-460.52M	-837.12M	-412.25M	-738.63M	-292.95M
Financing Cash Flow	-920.45M	-948.98M	1.24B	-803.57M	-657.05M	-643.79M

Cadence Design Technical Analysis

Technical Analysis SentimentPositive

Last Price329.26

Price Trends

50DMA319.93Positive

100DMA332.94Negative

200DMA327.92Positive

Market Momentum

MACD0.32Positive

RSI50.65Neutral

STOCH67.08Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CDNS, the sentiment is Positive. The current price of 329.26 is above the 20-day moving average (MA) of 326.59, above the 50-day MA of 319.93, and above the 200-day MA of 327.92, indicating a bullish trend. The MACD of 0.32 indicates Positive momentum. The RSI at 50.65 is Neutral, neither overbought nor oversold. The STOCH value of 67.08 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CDNS.

Cadence Design Risk Analysis

Cadence Design disclosed 43 risk factors in its most recent earnings report. Cadence Design reported the most risks in the "Finance & Corporate" category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added

3 New Risks

1.The growth of our business depends primarily on the semiconductor and electronics systems industries.Q4, 2025

2.Doing business with the public sector and heavily-regulated entities subjects us to risks related to government procurement processes, regulations and contracting requirements.Q4, 2025

3.Any actual or perceived failure to comply with new or existing laws, regulations and other requirements relating to the privacy, security, processing and cross-border transfer of Personal Information could adversely affect our business, financial condition and results of operations.Q4, 2025

Cadence Design Peers Comparison

Overall Rating

UnderperformOutperform

Sector (55)

Financial Indicators

CDNS against its peers
Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ADSK	76Outperform	$54.36B	33.46	52.50%	―	18.70%	59.41%
SNOW	75Outperform	$104.34B	-94.72	-53.56%	―	32.04%	23.46%
TYL	72Outperform	$16.77B	53.06	10.25%	―	7.96%	9.43%
CDNS	71Outperform	$91.00B	65.07	21.43%	―	17.64%	29.69%
HUBS	62Neutral	$9.62B	48.30	11.61%	―	20.06%	―
Sector *	55Neutral	$6.65B	3.83	-15.92%	6.20%	10.91%	7.18%
MSTR	42Neutral	$51.13B	-2.13	-25.97%	―	4.24%	-322.34%

* General Sector Average

Performance Comparison

CDNS and its peers over the selected period
Ticker	Company Name	Price	Change	% Change
CDNS	Cadence Design Systems	329.26	13.27	4.20%
ADSK	Autodesk Inc	260.01	-37.16	-12.50%
MSTR	Strategy Incorporated	122.35	-86.19	-41.33%
TYL	Tyler Technologies	425.52	-40.85	-8.76%
HUBS	HubSpot, Inc.	202.88	-187.73	-48.06%
SNOW	Snowflake, Inc.	301.22	44.30	17.24%

Cadence Design Corporate Events

Business Operations and StrategyStock Buyback

Cadence Design Expands Share Repurchase Authorization by $2.5B

Positive

Oct 26, 2026

On October 23, 2026, Cadence Design Systems’ board of directors authorized an additional $2.5 billion for repurchases of the company’s common stock under its existing share buyback program. The expanded authorization enables the company to buy shares...

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.

Date of analysis: Oct 27, 2026

Cadence Design AI Stock Analysis