CADENCE DESIGN SYSTEMS INC (CDNS)

Price—Loading quote

AI: Overvalued

Price checkThe verified price requires years of exceptional growth and offers little downside protection.

At $337.20, Cadence costs about 83 times 2025 reported earnings of $4.06 a share and 42 times management’s 2026 adjusted-earnings midpoint of $8.10. Adjusted earnings exclude share awards, acquired-asset charges, and integration costs, so that lower multiple is generous. In 2025, operating cash of $1.73 billion minus $142 million of capital spending produced $1.59 billion of free cash flow—cash left after running and investing in the business. The price is about 58 times that cash, supporting Overvalued.

Big pictureGrowth and cash generation are strong, but acquisitions helped the recent acceleration.

Revenue rose 14% to $5.30 billion in 2025, while operating income grew 10% and net income only 5%. Operating cash increased 37%, demonstrating better cash durability than the earnings growth alone suggests. First-half 2026 revenue then advanced 21% and net income increased 62%, partly reflecting an unusually weak comparison that included a legal charge. Management now expects 19% full-year revenue growth, but the acquired Hexagon engineering business contributes to that acceleration. Hardware orders and customer chip-development cycles can also create quarterly swings.

Business strengthRecurring contracts and backlog provide stability, though acquisitions weakened the cash cushion.

Management expected about 80% of 2026 revenue to recur, while June backlog reached $8.1 billion, meaning contracted work not yet recorded as sales. June current assets of $3.22 billion exceeded current liabilities of $1.85 billion, but $2.48 billion of debt surpassed $1.44 billion of cash following the €2.7 billion Hexagon purchase. Cadence spent $925 million on 2025 buybacks and reduced year-end shares 0.7%; however, Hexagon required 3.22 million new shares, second-quarter diluted shares rose 1.2%, and projected 2026 share-based pay is $569 million.

What could change the storySustained rapid growth could defend the price, while ordinary growth would expose it.

The bull case needs 2026 revenue near or above $6.34 billion, operating cash around $2.0 billion, and core design-software growth staying near the second quarter’s 18% after acquisition benefits fade. That would show Cadence’s artificial-intelligence tools are expanding demand rather than replacing licenses. The bear case strengthens if open-source design systems gain use for advanced chips, backlog stops rising, or growth returns toward 2025’s 14% without cash-margin gains. At roughly 42 times adjusted 2026 earnings, even good execution appears largely reflected in the price.

$337.20 price considered

AI: News

Guidance rose with growthCadence raised its yearly outlook after faster growth, strengthening near-term demand and cash expectations.

On July 27, 2026, Cadence reported second-quarter revenue of $1.584 billion, up 24% from $1.275 billion, and adjusted earnings of $2.11 a share. It raised 2026 revenue guidance to $6.26-$6.34 billion, adjusted earnings to $8.05-$8.15 a share, and operating cash expectations to about $2.0 billion. Shares gained 4.6% after hours to $354.30, according to Investing.com; the timing indicates investors welcomed the results and higher outlook.

Open-source design scareAn artificial-intelligence demonstration challenged Cadence’s competitive edge and triggered a sharp valuation debate.

On July 17, 2026, Investing.com reported that Moonshot AI’s Kimi K3 had designed a functional chip in 48 hours using open-source tools rather than Cadence or Synopsys software. Cadence closed 9.5% lower at $330.11. The timing supports an association, not proof that the demonstration caused the entire decline. The reported design used an older 45-nanometer open library, leaving commercial relevance uncertain; successful use on advanced chips could eventually reduce dependence on licensed tools.

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Free cash flow

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Financial statements

	2025	2024	2023	2022	2021	2020	2019	2018	2017	2016	2015	2014	2013	2012	2011	2010	2009	2008
Revenue	$5.30B	$4.64B	$4.09B	$3.56B	$2.99B	$2.68B	$2.34B	$2.14B	$1.94B	$1.82B	$1.70B	$1.58B	$1.46B	$1.33B	$1.15B	$936.0M	$852.6M	$1.04B
Operating income	$1.49B	$1.35B	$1.25B	$1.07B	$779.1M	$645.6M	$491.8M	$396.2M	$324.0M	$244.9M	$285.4M	$206.6M	$189.0M	$211.7M	$120.4M	−$29.0M	−$123.6M	−$1.57B
EBITDAderived	$1.72B	$1.55B	$1.40B	$1.21B	$921.4M	$791.2M	$614.6M	$514.9M	$439.5M	$364.5M	$403.6M	$322.3M	$287.3M	$300.9M	$212.0M	$59.4M	−$30.5M	−$1.45B
Net income	$1.11B	$1.06B	$1.04B	$849.0M	$696.0M	$590.6M	$989.0M	$345.8M	$204.1M	$203.1M	$252.4M	$158.9M	$164.2M	$439.9M	$72.2M	$126.5M	−$149.9M	−$1.86B
Basic EPSper diluted share	$4.09	$3.89	$3.86	$3.13	$2.54	$2.16	$3.62	$1.26	$0.75	$0.71	$0.88	$0.56	$0.59	$1.63	$0.27	$0.49	-$0.58	-$7.30
Diluted EPSper diluted share	$4.06	$3.85	$3.82	$3.09	$2.50	$2.11	$3.53	$1.23	$0.73	$0.70	$0.81	$0.52	$0.56	$1.57	$0.27	$0.48	-$0.58	-$7.30

Review source filings at SEC.gov ↗

Insider buys & sells

Jul 1, 2024–Jun 30, 2026

Buys1$13.9K disclosed value

Sells (SEC code S)204$175.34M disclosed value

Transaction	Insider	Type	Shares	Price	Value	Owned after
Jun 22, 2026Form 4 · 10b5-1	TENG CHIN-CHISr. Vice President	SellCommon Stock	160	$390.92	$62.5K	145.3K
Jun 22, 2026Form 4 · 10b5-1	TENG CHIN-CHISr. Vice President	SellCommon Stock	320	$389.63	$124.7K	145.4K
Jun 22, 2026Form 4 · 10b5-1	TENG CHIN-CHISr. Vice President	SellCommon Stock	220	$388.88	$85.6K	145.8K
Jun 22, 2026Form 4 · 10b5-1	TENG CHIN-CHISr. Vice President	SellCommon Stock	1.3K	$387.43	$496.3K	146.0K
Jun 22, 2026Form 4 · 10b5-1	TENG CHIN-CHISr. Vice President	SellCommon Stock	240	$385.85	$92.6K	147.3K

Review ownership filings at SEC.gov ↗

CADENCE DESIGN SYSTEMS INC (CDNS)

Financial charts

Financial statements

Insider buys & sells