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Key Takeaways
- Shares of electronic design automation firm Cadence Design Systems led the S&P 500 Tuesday following a strong earnings report.
- The company cited demand for AI-related products, with revenue from its Cadence.AI portfolio tripling year-over-year.
- Cadence sales skyrocketed in its intellectual property and system design and analysis businesses.
Shares of Cadence Design Systems (CDNS) shares climbed more than 12% on Tuesday to notch the top daily performance of any S&P 500 stock after the electronic design automation firm posted strong quarterly results and boosted its full-year guidance.
The provider of design software, hardware, intellectual property (IP) and other solutions posted revenue of $1.215 billion for the third quarter of 2024, up around 19% year-over-year. Non-GAAP earnings per share (EPS), at $1.64, was up more than 30% from the year-ago period. Both figures came in ahead of consensus forecasts.
Cadence also lifted its revenue and non-GAAP earnings forecasts for the full year.
Q3 Highlights
Cadence specializes in integrated circuits and electronic systems to aid in design processes across industries including communications, automotive, defense, and industrial markets.
Robust demand for artificial intelligence (AI) design products underpinned Cadence’s strong quarterly performance. In the earnings report, the company touted the productivity benefits of its Cadence.AI portfolio, which incorporates generative AI technology along with AI-driven big data analytics. Revenue from Cadence.AI nearly tripled year-over-year.
“Customers are achieving outstanding results with Cadence.AI, and I’m excited by its accelerating proliferation as AI rapidly becomes an integral part of the design workflow,” said CEO Anirudh Devgan.
Analyst Reaction and Stock Performance
Following the strong financial results, analysts at Baird lifted their price target on Cadence Design stock to $340 from $332. Needham analysts, meanwhile, trimmed their price target to $315 from $320 but maintained their buy rating.
Cadence Design shares have been volatile so far in 2024. Tuesday’s gains returned the stock to positive territory for the year.