HomeMost PopularUnleashing the Bull: The Rise of Cadence Design Systems (CDNS)

Unleashing the Bull: The Rise of Cadence Design Systems (CDNS)

Actionable Trade Ideas

always free

The Unrivalled Cadence

In the ever-shifting landscape of technology, Cadence Design Systems (CDNS) stands as a beacon of innovation and potential. This Zacks Rank #1 (Strong Buy) entity specializes in electronic design automation (EDA) and system design enablement (SDE) software tools, essential pillars supporting the global chip-making industry.

In a world witnessing a skyrocketing demand for artificial intelligence, Cadence Design is strategically positioned to ride this wave, offering an enticing prospect for investors eyeing the future of technology.

Exceptional Market Position

While giants like Nvidia and Tesla bask in the limelight for their AI hardware, Cadence silently plays a pivotal role in the development of these revolutionary technologies. Their EDA and SDE tools empower chip designers to craft the intricate and effective microchips fueling our smartphones and autonomous vehicles.

Moreover, operating in the software segment of the semiconductor industry presents a particularly alluring domain. Semiconductor manufacturing demands vast capital expenditure, whereas software boasts high margins and low capital outlay. Cadence Design reaps the benefits with gross margins of 90% and net margins of 26%.

Historical Outperformance

Amidst the AI renaissance, CDNS shines as a top performer, boasting a 35% annual compounded stock growth rate over the past decade. This far outstrips industry and broader market benchmarks, underscoring its consistent reliability.

Zacks Investment Research
Image Source: Zacks Investment Research

Soaring Earnings Predictions

Despite recent stagnation in earnings revisions, the analyst sentiment is taking a bullish turn. In the past week alone, earnings estimates have surged upwards. Forecasts for this year and the next have been adjusted by 2% and 6% respectively, with projected year-over-year growth ranging from mid to high teens.

Zacks Investment Research
Image Source: Zacks Investment Research

Technical Breakthrough

Adding to the fervor, Cadence’s stock recently broke out technically, surpassing key resistance levels at the close of the previous week. Surging past the $310 threshold, momentum has propelled the stock to unprecedented highs, hinting at a continued rally.

Image Source: TradingView


Cadence Design Systems emerges as a hidden gem within the technology sector, primed to capitalize on the AI revolution and other major technological trends. Investors seeking exposure to the burgeoning AI market and a track record of unwavering success should keep a close eye on CDNS.

Just Released: Zacks Top 10 Stocks for 2024

Hurry – dive into the Zacks Top 10 Stocks for 2024. Meticulously selected by Zacks Director of Research, Sheraz Mian, this portfolio has displayed remarkable and sustained success. From its inception in 2012 till November 2023, the Zacks Top 10 Stocks surged by a staggering +974.1%, nearly tripling the S&P 500’s +340.1% growth. Be among the first to explore these newly unveiled stocks brimming with immense potential.

Want the latest recommendations from Zacks Investment Research? Download the 7 Best Stocks for the Next 30 Days.

Cadence Design Systems, Inc. (CDNS): Free Stock Analysis Report

Read the full article at Zacks.com for more insights.

The views and opinions expressed in this article are those of the author and do not necessarily reflect those of Nasdaq, Inc.

Swing Trading Ideas and Market Commentary

Need some new swing ideas? Get free weekly swing ideas and market commentary from Jonathan Bernstein here: Swing Trading.

Explore More

Weekly In-Depth Market Analysis and Actionable Trade Ideas

Get institutional-level analysis and trade ideas to take your trading to the next level, sign up for free and become apart of the community.