Is Cadence Design Systems Inc. overvalued?

In our latest published analysis dated 2026-05-10, CDNS looks meaningfully overvalued. The price recorded at analysis is USD 363 versus a composite fair-value midpoint of USD 152 (range USD 110–USD 196), implying roughly 58.1% downside to the midpoint at that date.

What is CDNS's fair value?

Our latest published report, analyzed 2026-05-10, gives CDNS a composite fair-value range of USD 110–USD 196, with a midpoint of USD 152. The range is triangulated across multiple valuation models and weighted by reliability for Cadence Design Systems Inc.'s archetype; it is a dated research output, not a live price.

Should I buy CDNS now?

Our latest published rating for CDNS, analyzed 2026-05-10, is Sell with a confidence score of 88/100. Cadence Design Systems Inc. looks meaningfully overvalued at the analysis-date price of USD 363 versus a fair-value midpoint of USD 152. This is research for educational purposes, not personalized investment advice.

What are the biggest risks for CDNS?

The top risks our latest published report dated 2026-05-10 flags for Cadence Design Systems Inc. are: Severe Multiple Compression; Geopolitical Restrictions; Semiconductor Cyclicality.

What is CDNS's rating?

Our latest published rating for CDNS, analyzed 2026-05-10, is Sell, with a confidence score of 88/100 and a moat score of 9/10. It reflects the composite fair-value range (USD 110–USD 196) versus the price recorded at analysis (USD 363).

What archetype is CDNS?

In the latest published report analyzed 2026-05-10, Cadence Design Systems Inc. is classified as a mature compounder stock. Archetype determines how every downstream parameter — discount rate, terminal growth, deceleration curve, terminal multiple, scenario probability weights, scorecard weights, and which valuation models are prioritized — is calibrated for CDNS.

What is CDNS's implied growth rate?

Reverse DCF for Cadence Design Systems Inc. (CDNS) backs out the revenue or earnings growth rate the current share price implies, holding terminal value, margin, and discount-rate assumptions constant.

Is CDNS's implied growth realistic?

We compare the implied rate to our own forecast deceleration curve and to the historical five-year actual. When the implied rate exceeds the realistic ceiling, the price is pricing in optimism the business has not yet demonstrated.

What discount rate is used for CDNS?

Reverse DCF uses cost of equity (Ke), not WACC, to stay consistent with the EPS-based forward valuation models. Ke is derived from CAPM with adjusted beta; the strict and moderate variants are documented in the assumption ledger.

How does reverse DCF inform a buy or sell call?

When the implied growth rate is below our forecast, the market is underpricing the business; when it is above, the market is overpricing. The reverse-DCF read is one of four lenses that feed the composite fair-value range and the rating band.

CDNS reverse DCF: implied growth at the report price

Latest published researchAnalyzed 2026-05-10; report age: stale; sources: unverified. Age and source freshness are disclosed but do not remove the latest published report from discovery or indexing. Prices and valuation figures are the analysis-date snapshot, not a live quote.

Direct answer

Cadence Design Systems operates in a highly consolidated, sticky duopoly for EDA software. Increasing chip complexity ensures long-term secular demand, but current valuation is irrationally disconnected from fundamental realities. Fair value range: low $110, high $196, with mid-point at $152.

REVERSE DCF FAQ

CDNS reverse dcf questions

Reverse DCF for Cadence Design Systems Inc. (CDNS) backs out the revenue or earnings growth rate the current share price implies, holding terminal value, margin, and discount-rate assumptions constant.

FAQ

CDNS — frequently asked questions

In our latest published analysis dated 2026-05-10, CDNS looks meaningfully overvalued. The price recorded at analysis is USD 363 versus a composite fair-value midpoint of USD 152 (range USD 110–USD 196), implying roughly 58.1% downside to the midpoint at that date.

Metric	Current	Trigger threshold
Revenue growth decelerating below 10%.	Monitor	Deterioration versus the report thesis
Operating margins contracting from 32% peak.	Monitor	Deterioration versus the report thesis
Major customer shifts to rival Synopsys.	Monitor

Line item	2021-12-31	2022-12-31	2023-12-31	2024-12-31	2025-12-31	Trend
Revenue	$2.99B	$3.56B+19.1%	$4.09B+14.9%	$4.64B+13.4%	$5.30B+14.2%	+15.4%
Gross profit	$2.68B	$3.19B	$3.65B	$3.99B	$4.57B	+14.3%
Operating income	$778.0M	$1.07B	$1.26B	$1.38B	$1.65B	+20.7%
Net income	$696.0M	$849.0M+22.0%	$1.04B+22.5%	$1.06B+1.9%	$1.11B+4.7%	+12.4%
EPS (diluted)	$2.50	$3.09	$3.82	$3.85	$4.06	+12.9%
EBITDA	$916.1M	$1.20B	$1.46B	$1.67B	$1.87B	+19.6%
R&D	$1.13B	$1.25B	$1.44B	$1.55B	$1.77B	+11.7%
SG&A	$749.3M	$846.3M	$932.7M	$1.03B	$1.12B	+10.5%

CDNS reverse dcf questions

CDNS — frequently asked questions

CDNS Cadence Design Systems Inc. fair value $110–$196

§1 Executive summary

Names readers of CDNS also follow

§2 Bear case

Severe Multiple Compression

Geopolitical Restrictions

Semiconductor Cyclicality

§3 Financial history

Income statement — last six periods

Quality scores

Numbers analysis

Read the full analysis — 11 more sections.