SNPS in Right Place, Right Time? Cory Johnson on Role in NVDA & Software

**SPEAKER_1** (0:00)
But I want to bring Marlee back into the conversation, turn our attention to another name that we're watching post-earning, Synopsys, with Cory Johnson, Chief Market Strategist at Epistrophe Capital Research. Good afternoon, Cory. All right, so Synopsys haven't talked about this one much today, as one can imagine, but strong earnings beat Ray's quarter, particularly strong results for the design adoption of 81 percent. What were your biggest takeaways?

**Cory Johnson** (0:24)
Yeah, so this is such an important company, and it's such an interesting time for Synopsys.
The importance of this company is that this is the software that designs chips, and increasingly it's a software that designs the things around chips. What we heard from Nvidia last night was that their Vera Rubin is coming to market really fast, they were able to make incredible design wins around that, that Nvidia expects to get $40 billion in revenues for every gigawatt of compute that's installed compared to the 18 billion they got with Blackwell. How are they able to design these new chips so much faster? With Synopsys software. So Synopsys software being used by Nvidia, by Cisco, by MediaTek, by Samsung Foundry, all saying that they're seeing 10 times faster design closure by using these Synopsys products. So that's why you see this big pickup in Synopsys revenue and why they put this really terrific quarter together.
They're also lapping this big acquisition they did a year ago, and you're starting to see those results really show up across the board, whether it's in the top line or an opera gap, gross margins or even operating margins.

**SPEAKER_3** (1:25)
And Cory, I mean, as I'm looking back over the last year, Synopsys had one of its worst days ever last September. Part of it tied to that acquisition, moving a little bit more slowly than what they had anticipated.
Now we're fast forward 11 months here. We haven't erased the yearly losses, but we've certainly put a dent in them. Did these quarterly results finally prove that this turnaround story is real?

**Cory Johnson** (1:47)
I think we're seeing in the numbers, right? I don't have to have an opinion in the stock, and I don't own the stock at all. Today, I certainly wish I did. It's down 25% of the year, but having a fantastic day today, because I think the market is recognizing how smart this acquisition of Ansys was. Ansys was a big European customer base that allows them to take their design further out beyond just the semiconductor. They already had products like that in the marketplace, but this is at a different level. It was a difficult acquisition to do. It got tied up in a lot of China, US stocks, but once it got approved and once it got completed, now you see the Synopsys workforce out there, Salesforce out there with a new product to sell. And I talked to the CFO, Sheila Glazer, terrific CFO down at Synopsys, I talked to her last night, and she told me that the Salesforce's doors are opening not just for the new Ansys products they're selling, but the other stuff that Synopsys has to say, because they have a new offering out there, their Salesforce has got some sort of a wind behind their sales right now, and you can see it in these results, and it's showing off across the board. We've also done a big job of cost cutting down there in the process of this merger, and that's why the margins have gotten better, and it helped them increase their guidance for everything, for revenue, for margins, for earnings, of course, both for the coming quarter and for the coming year.

**SPEAKER_1** (3:03)
What do you think it tells us, Cory, then, about the broader software space? I mean, the IGVs are big today, but what I mentioned earlier in the show was that it's rallying alongside chips, and if you say this is the software that designs the chips, we're starting to see these two pillars of the tech trade, which have moved like a ping pong match, whether you've been long, hardware is short, software is vice versa, that it's no longer a zero-sum game with these two categories, that things are starting to merge together.

**Cory Johnson** (3:36)
It's 100 percent right, and I think a lot of your guests over the last few months have said, the SaaS apocalypse is silly, and the stocks shouldn't be down, but they're down. I don't think it's silly at all.
The things that AI can do are jaw-dropping. The success of Claude Code and Codex products from OpenAI is incredible, and it's going to replace a lot of products out there in the world. Investors have got to do some homework and figure out what they're buying. They're not just wiggly lines on the screen here.