2 Software Stocks Are Merging to Bet On AI -- but Investors, Beware of the Hype
As the artificial intelligence (AI) race heats up, investors have become increasingly aware of the powerful position of electronic design automation (EDA) software companies. That's because these companies deal with a type of design suite specifically for semiconductors that are so vital to AI's development. As a result, industry leaders Synopsys (NASDAQ: SNPS) and Cadence Design Systems (NASDAQ: CDNS) have been off to the races, sporting respective gains of 59% and 71% since the start of 2023.
Synopsys stock has fallen as of late, though, on rumors it would try to acquire Ansys (NASDAQ: ANSS), which produces software that analyzes and simulates engineered parts and systems before they're manufactured. Synopsys confirmed the rumor in late December and is offering to acquire Ansys for $35 billion. If successful, this will be one of the largest-ever tech mergers and acquisitions in a big bet on the future of AI. But investors should be aware of some important details before even considering buying right now.
On the surface, a tie-up between Synopsys and Ansys may look confusing. After all, Synopsys is a high-tech software business catering primarily to semiconductor companies and other businesses that design and assemble computing systems with chips. Ansys, by comparison, only counts about one-third of its revenue from semiconductor and computing customers. Its simulation software is primarily used for mechanical processes, not electrical ones.
Source Fool.com
Synopsys Inc. Stock
The stock is an absolute favorite of our community with 26 Buy predictions and no Sell predictions.
As a result the target price of 567 € shows a slightly positive potential of 13.66% compared to the current price of 498.85 € for Synopsys Inc..
