Cadence Design Systems Inc (CDNS)

Price$322.00Cached quoteAs of 2026-09-25 05:19 UTC

AI: Overvalued

Price checkThe valuation still asks for premium growth despite a sharp recent share-price retreat.

Cadence Design Systems, Inc. is listed on the Nasdaq Global Select Market under ticker CDNS. Using management’s 2026 non-GAAP EPS midpoint, the stock trades at about 35 times adjusted earnings; using GAAP EPS, the multiple is near 59 times. Estimated free cash flow—operating cash flow minus capital spending—implies roughly a mid-40s multiple. Those are demanding levels for a company guiding to high-teens revenue growth, so the current valuation leaves limited room for execution misses.

Big pictureCash generation is durable, but acquisitions have reduced liquidity and increased balance-sheet obligations.

Management expects about $2.0 billion of 2026 operating cash flow and roughly $240 million of capital spending, supporting healthy free cash flow. At June 30, Cadence held about $1.44 billion of cash against about $2.48 billion of long-term debt, with $500 million of notes due in 2027 and a $1.25 billion revolving credit facility. Cadence spent $400 million on buybacks in the first half, yet issued 3.224 million shares for Hexagon and recorded $285 million of stock-based compensation, so repurchases partly offset dilution.

Business strengthRecurring software, record backlog, and AI-driven demand make earnings more resilient than typical chip cycles.

Second-quarter revenue grew about 24% year over year, non-GAAP operating margin reached 45.5%, and backlog rose to a record $8.1 billion, with $4.2 billion expected from remaining obligations over the next year. In 2025, 80% of revenue was recurring and no customer exceeded 10% of sales. That cushions volatility, but does not remove cyclicality: Cadence says semiconductor and electronics spending depends on new design starts, while export controls, especially involving China, can disrupt demand or delivery.

What could change the storyUpside needs sustained AI-led growth; downside appears if growth normalizes before the valuation does.

The bull case requires organic growth to stay in the mid-to-high teens, AI design tools and system analysis to deepen customer spending, and non-GAAP margins to remain around the mid-40s. In that case, a premium earnings multiple could persist. The bear case is low-double-digit growth, weaker hardware or IP timing, tighter China restrictions, or disappointing Hexagon integration; then investors could value each dollar of earnings at a high-20s to low-30s multiple. Buybacks help, but acquisition shares and stock compensation can offset share-count reduction.

AI: News

PCIe 6.0 complianceCadence’s PCIe 6.0 subsystem passed first-pass compliance testing, strengthening its AI/HPC interface-IP positioning.

On September 1, Cadence said its PCIe 6.0 PHY and controller subsystem, implemented on TSMC’s N3 process, passed all official tests at the PCI-SIG compliance workshop and entered the Integrators List. That matters because PCIe is a core interconnect for AI and high-performance computing systems. Successful compliance reduces technical adoption risk for customers, although it does not by itself guarantee material near-term revenue.

Q2 guidance raisedStrong second-quarter growth and record backlog led management to raise its full-year revenue and cash outlook.

On July 27, Cadence reported second-quarter revenue of $1.584 billion, up from $1.275 billion a year earlier, with a 45.5% non-GAAP operating margin. Backlog reached $8.1 billion. Management raised 2026 revenue guidance to $6.26-$6.34 billion, non-GAAP EPS guidance to $8.05-$8.15, and operating cash flow to about $2.0 billion. The update supports the durability of demand, but also raises the bar for future results.

AuraStack AI launchedCadence expanded agentic AI from chip design into advanced packaging and printed-circuit-board workflows.

On July 16, Cadence introduced AuraStack AI Super Agent on Allegro AI Studio for PCB and advanced packaging design. The product coordinates specialized AI agents across planning, implementation, manufacturability, and multiphysics analysis. Cadence says the platform can materially improve design productivity and time to market. Strategically, it broadens the company’s AI offering across the full electronic-system workflow; financially, investors still need proof that productivity claims translate into durable pricing, seat expansion, or new customers.

Hexagon deal closesThe Hexagon design-and-engineering acquisition expanded system simulation while adding integration, debt, and dilution considerations.

On February 23, Cadence completed its approximately €2.7 billion acquisition of Hexagon’s Design and Engineering business, paying about 70% in cash and 30% in Cadence shares. The deal expands structural analysis, acoustics, and multibody dynamics capabilities alongside Cadence’s existing multiphysics tools. Management expected the acquired business to add about $160 million of 2026 revenue, while being dilutive to 2026 non-GAAP EPS before turning accretive in 2027.

Loading local price history

Revenue

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Net income

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Free cash flow

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Total cash / debt

CashTotal debt

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

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
Gross profit	$4.57B	$3.99B	$3.65B	$3.19B	—	—	—	—	—	—	—	—	—	$1.25B	$1.08B	$904.5M	$820.5M	$988.3M
Gross margin	86.36%	86.05%	89.36%	89.57%	—	—	—	—	—	—	—	—	—	94.47%	93.94%	96.64%	96.23%	95.16%
Research & development	$1.77B	$1.55B	$1.44B	$1.25B	$1.13B	$1.03B	$935.9M	$884.8M	$804.2M	$735.3M	$637.6M	$603.0M	$534.0M	$454.1M	$400.7M	$376.4M	$354.7M	$457.9M
Operating expenses	$3.80B	$3.29B	$2.84B	$2.49B	$2.21B	$2.04B	$1.84B	$1.74B	$1.62B	$1.57B	$1.42B	$1.37B	$1.27B	$1.11B	$1.03B	$964.9M	$976.2M	$2.61B
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
Operating margin	28.17%	29.10%	30.59%	30.15%	26.07%	24.06%	21.05%	18.53%	16.67%	13.49%	16.77%	13.07%	12.94%	15.96%	10.47%	−3.09%	−14.50%	−151.48%
EBITDA	$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
EBITDA margin	32.47%	33.35%	34.14%	33.85%	30.83%	29.49%	26.31%	24.08%	22.62%	20.07%	23.71%	20.39%	19.68%	22.68%	18.44%	6.34%	−3.57%	−139.30%
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
Net profit margin	20.94%	22.74%	25.46%	23.84%	23.29%	22.02%	42.33%	16.17%	10.50%	11.18%	14.83%	10.05%	11.25%	33.17%	6.28%	13.52%	−17.58%	−178.77%
Basic EPSper basic 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 official source filings ↗

Owners

Reported shareholders

Reference date Jun 30, 2026

9.68%of listed shares

BlackRock, Inc.26.66M shares · Jun 30, 2026

View holders

Top 20 reported holders of CDNS
Holder	% owned
BlackRock, Inc.	9.68%26.66M shares
VANGUARD CAPITAL MANAGEMENT LLC	6.54%18.02M shares
STATE STREET CORP	4.73%13.03M shares
FMR LLC	3.47%9.55M shares
Invesco Ltd.	3.26%8.98M shares
JPMORGAN CHASE & CO	2.86%7.87M shares
GEODE CAPITAL MANAGEMENT, LLC	2.61%7.18M shares
VANGUARD PORTFOLIO MANAGEMENT LLC	2.53%6.96M shares
VAN ECK ASSOCIATES CORP	1.78%4.89M shares
Capital International Investors	1.77%4.89M shares
WELLINGTON MANAGEMENT GROUP LLP	1.77%4.88M shares
ALLIANCEBERNSTEIN L.P.	1.73%4.76M shares
JENNISON ASSOCIATES LLC	1.64%4.5M shares
GOLDMAN SACHS GROUP INC	1.54%4.24M shares
MORGAN STANLEY	1.30%3.59M shares
NORGES BANK	1.23%3.4M shares
UBS AM, a distinct business unit of UBS ASSET MANAGEMENT AMERICAS LLC	1.23%3.39M shares
MASSACHUSETTS FINANCIAL SERVICES CO /MA/	1.06%2.92M shares
NORTHERN TRUST CORP	1.04%2.85M shares
FRANKLIN RESOURCES INC	1.02%2.82M shares

Percentages use 275.39M shares of this listed class outstanding on Jun 30, 2026.

Gray completes the 100% scale. Reported positions may overlap; holders have different reporting dates.

Source: SEC Form 13F ↗Updated Sep 29, 2026 · Quarterly data

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 ↗

Community posts

View community

It’s quiet here.

No posts about CDNS yet. Start the conversation.

Write the first post

Cadence Design Systems Inc (CDNS)

Financial charts

Financial statements

Owners

Insider buys & sells

Community posts

It’s quiet here.