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Quote this valuation with its source: Fair value, Potential value and the price at analysis.
FAQ
CDNS — frequently asked questions
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 363 USD versus our fair value of 152 USD; the high endpoint is presented separately as potential value of 196 USD. That implies roughly 58.1% downside to fair value at that date.
Our latest published report, analyzed 2026-05-10, gives CDNS a fair value of 152 USD and a potential value of 196 USD. The conclusion 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. Cadence Design Systems, Inc. looks meaningfully overvalued at the analysis-date price of 363 USD versus fair value of 152 USD; potential value is 196 USD. This is research for educational purposes, not personalized investment advice.
What are the biggest risks for CDNS?
The dedicated bear-case section in our report analyzed 2026-05-10 documents Cadence Design Systems, Inc.'s material risks, evidence, thresholds, and thesis-invalidation conditions. Scenario-specific explanations remain in that section so the report does not repeat or decontextualize them elsewhere.
What is CDNS's rating?
Our latest published rating for CDNS, analyzed 2026-05-10, is Sell, with a published moat assessment of 9/10 (Wide). It reflects our fair value of 152 USD, the potential value of 196 USD, and the price recorded at analysis (363 USD).
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§1 Resumen ejecutivoEN
Respuesta en 30 segundosSell
Precio frente a valor
Precio
$362.70
Valor razonable
$152.08
Valor potencial
$195.90
A fecha de
Fecha de cotización no registrada
Por qué puede funcionar
Bull: AI-driven chip design and custom silicon trends accelerate, pushing EDA software usage higher across non-traditional tech companies.
Qué cambiaría nuestra opinión
Severe Multiple Compression: Market rotates out of high-multiple AI beneficiaries, compressing the 38x forward PE toward historical software averages.
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.
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.
Cycle upside
Explosive demand for custom silicon, AI accelerators, and advanced packaging drives secular EDA adoption.
Recomendación de la casa
Sell. Exceptional business quality overshadowed by absurd valuation multiples detached from mathematical reality.
Cadence Design Systems, Inc. develops computational, AI-driven software, hardware, and silicon intellectual property products and solutions. The company offers functional verification services, such as Jasper, a formal verification platform; Xcelium, a parallel logic simulation platform; Verisium, a generative AI solution; Palladium, an enterprise emulation platform; and Protium, a prototyping platform for chip verification, as well as digital IC design and sign off products, including In novus platform; and custom IC design and simulation product include Virtuoso, a platform to design and verify analog. It also provides Xcelium logic simulator and other front-end verification and virtual prototyping technologies; controllers and physical interfaces; PCI Express, universal accelerator and compute express links, and multiple memory interfaces; and Ten Silica, a digital signal processor. In addition, the company's design IP portfolio includes serializer/deserializer, peripheral component interconnect, USB, and other standard protocols; and Secure-IC, a solution for embedded security IP. Additionally, it provides System Design and Analysis (SD&A) platform, a solution that enables end-to-end system-level design and verification across chips, packages, PCBs, and electronic systems; Allegro X and Orca X platforms for PCB and advanced packaging; Sigrity X for signal and power integrity; AIR for RF design; Fidelity for computational fluid dynamics; Celsius for thermal and airflow analysis; Clarity 3D solver for electromagnetic and power electronics analysis and simulation; Integrity 3D-IC solution for 3D-IC and multi-chiplet designs; the Optimality Intelligent System Explorer, Reality digital twin, and Millennium enterprise multiphasic platforms; Allegro system design platform; and molecular modeling and simulation solutions and services. The company has a strategic collaboration with NVIDIA. The company was incorporated in 1987 and is headquartered in San Jose, California.
§2 Caso bajistaEN
A rapid deceleration in semiconductor R&D spending combined with a broad market re-rating of hyper-growth tech multiples would decimate CDNS's current premium. Implied perpetual growth rates of 29% are impossible to sustain.
A severe semiconductor cyclical downturn or geopolitical restriction on IP exports to China curtails revenue growth. The current forward multiple severely compresses.
Revenue deceleration signals that semiconductor design starts and EDA software renewals are moderating among core chipmakers. Slower customer expansion undermines the compounding recurring software revenue model and compresses premium software valuation multiples.
Actual:14.1% for the period ended 2025-12-31
Alerta si< 10.0% over two consecutive quarters
§3 Foso competitivoEN
Wide
Intense switching costs and consolidated duopoly with Synopsys. Mission-critical nature of EDA software ensures extreme stickiness.
Beneficio económico
Economic profit is supported when reported returns exceed the company cost-of-capital hurdle.
9/ 10
Wide
Sources of advantage
01Intense switching costs and consolidated duopoly with Synopsys. Mission-critical — Intense switching costs and consolidated duopoly with Synopsys. Mission-critical nature of EDA software ensures extreme stickiness.Wide
Amenazas conocidas al foso
Amenaza
Severidad
Cronograma
Mitigación
Open-source EDA tool proliferation. Consolidation of major semiconductor customers increasing pricing power against CDNS.
medium
Monitor
Monitor the threat against the report checkpoints.
If revenue growth exceeds 15% and margins hold above 32%, the multiple may sustain near-term. If forward guidance disappoints or AI-linked bookings stall, expect violent multiple compression.
En línea
Hold
Disparador: In-line results
If revenue growth exceeds 15% and margins hold above 32%, the multiple may sustain near-term. If forward guidance disappoints or AI-linked bookings stall, expect violent multiple compression.
Fallo
Reassess
Disparador: Downside surprise
If revenue growth exceeds 15% and margins hold above 32%, the multiple may sustain near-term. If forward guidance disappoints or AI-linked bookings stall, expect violent multiple compression.
Calidad de los beneficios
If revenue growth exceeds 15% and margins hold above 32%, the multiple may sustain near-term. If forward guidance disappoints or AI-linked bookings stall, expect violent multiple compression.
Warning level: < 10.0% over two consecutive quarters. Revenue deceleration signals that semiconductor design starts and EDA software renewals are moderating among core chipmakers. Slower customer expansion undermines the compounding recurring software revenue model and compresses premium software valuation multiples.
Capital allocation should be evaluated against reinvestment needs, balance-sheet strength, and shareholder returns.
Ingresos más recientes5296,8 MCAGR de ingresos +15,4 %
Margen operativo31,1 %5 periodos fiscales
Flujo de caja libre más reciente1586,9 MFY2025
Caja neta384,9 MFY2025
Desglose de la cuenta de resultadosCómo la escala del negocio se convierte en beneficio declarado.
StockMarketAgent.AI
Ingresos5296,8 MCoste de ventas−722,2 MBeneficio bruto4574,5 MGastos operativos−2924,7 MBeneficio operativo1649,8 MPartidas no operativas e impuestos−540,9 MBeneficio neto1108,9 M
Datos del historial financiero
Ingresos
5.296.759.000
Coste de ventas
722.249.000
Beneficio bruto
4.574.510.000
Gastos operativos
2.924.729.000
Beneficio operativo
1.649.781.000
Partidas no operativas e impuestos
-540.893.000
Beneficio neto
1.108.888.000
Resumen del balanceCómo se mantienen y financian los activos declarados en el período seleccionado.
StockMarketAgent.AI
Composición de activosFinanciado por
Activos totales10,2 mil MEfectivo3001,3 MActivos corrientes4669,7 MPasivos totales4679 MPasivos corrientes1635,3 MPatrimonio neto5474,2 M
Datos del desglose del balance
Activos totales
10.153.148.000
Efectivo
3.001.317.000
Activos corrientes
4.669.673.000
Pasivos totales
4.678.967.000
Pasivos corrientes
1.635.291.000
Patrimonio neto
5.474.181.000
Ingresos y beneficiosCómo la escala del negocio se convierte en beneficio declarado.
Efectivo y deudaLiquidez disponible frente al endeudamiento total.
Generación de efectivoFlujo de caja operativo frente al flujo de caja libre.
RentabilidadEvolución de los márgenes bruto, operativo y neto.
Datos financieros puntuales utilizados en el análisis del 2026-05-10.
Datos del historial financiero
Período
Ingresos
EBITDA
Beneficio neto
Flujo de caja operativo
Flujo de caja libre
Capex
Depreciación y amortización
Compensación basada en acciones
Recompras de acciones
Dividendos pagados
Emisión neta de deuda
Flujo de inversión
Flujo de financiación
Efectivo inicial
Efectivo final
Efectivo e inversiones
Deuda total
Margen operativo
ROIC
WACC
Diferencial ROIC−WACC
2021-12-31
2988,2 M
916,1 M
696 M
1101 M
1034,1 M
66,9 M
130,7 M
210,1 M
730,3 M
—
0
—
—
—
—
1088,9 M
454,7 M
26,0 %
—
5,8 %
—
2022-12-31
3561,7 M
1203,7 M
849 M
1241,9 M
1117,7 M
124,2 M
135,4 M
270,4 M
1162 M
—
400 M
—
—
—
—
882,3 M
887,4 M
30,1 %
—
8,7 %
—
2023-12-31
4090 M
1463,9 M
1041,1 M
1349,2 M
1246,7 M
102,5 M
145,7 M
325,6 M
836,5 M
—
-100 M
—
—
—
—
1008,2 M
764,4 M
30,9 %
—
8,9 %
—
2024-12-31
4641,3 M
1666,8 M
1055,5 M
1260,6 M
1118 M
142,5 M
195 M
391,2 M
787,8 M
—
1846,6 M
—
—
—
—
2644 M
2585,1 M
29,8 %
—
9,5 %
—
2025-12-31
5296,8 M
1872,4 M
1108,9 M
1728,8 M
1586,9 M
141,9 M
233,8 M
455,2 M
1094,9 M
—
0
—
—
—
—
3001,3 M
2616,4 M
31,1 %
—
10,1 %
—
§9 Comparación de valoración con pares
Valor razonableReport-date price
Cadence Design Systems, Inc.CDNS
Precio / valor razonable
Valor razonable152,08 US$Report-date price362,7 US$
Fecha de evaluación
Ventaja competitivaWide
Cuadro de mando de inversión66 / 100
Uber Technologies Inc.UBER
Precio / valor razonable
Valor razonable78,99 US$Report-date price69,22 US$
Fecha de evaluación
Ventaja competitivaNarrow
Cuadro de mando de inversión68 / 100
Salesforce, Inc.CRM
Precio / valor razonable
Valor razonable220,82 US$Report-date price237,5 US$
Fecha de evaluación
Ventaja competitivaWide
Cuadro de mando de inversión63 / 100
Cadence Design Systems, Inc.CDNS
Precio / valor razonable
Valor razonable152,08 US$Report-date price362,7 US$
For existing longs, use current $362.70 levels to harvest profits or sell covered calls, given the -58% fundamental downside.
§12 Perspectivas de inversoresEN
Bull view
Buy
Upside case depends on the report valuation range and named growth catalysts.
Base view
Sell
The intrinsic fair value of $152.08 exposes a severe 60% divergence from current pricing. A reverse DCF implies an impossible 29% 10-year EPS CAGR.
§14 Recomendación finalEN
Acción
Vender
Sell. While the underlying business is a pristine, asset-light compounder within a sticky duopoly, current market pricing represents speculative euphoria entirely detached from decade-long cash flow realities.
Reassess the thesis against the named valuation, risk, and quarterly checkpoint evidence in this report.
§15Your notes
Capture your own thesis, position size, and follow-up questions. Stays on this device, only you can see it.
A drop in cash flow conversion highlights payment friction, uncollected license billings, or revenue disruptions tied to regional trade barriers. Weaker cash generation restricts strategic investments in artificial intelligence design tooling and share repurchases.
Diminishing returns on capital demonstrate that incremental software development expenditures and acquisitions are failing to expand core design automation market share. Subdued capital productivity impairs long-term economic moat expansion.
CDNS maintains its duopoly position and rides the AI silicon wave, but valuation normalizes to match fundamental cash flow generation and mature compounder characteristics.
Warning level: < 12.0% over trailing twelve months. Diminishing returns on capital demonstrate that incremental software development expenditures and acquisitions are failing to expand core design automation market share. Subdued capital productivity impairs long-term economic moat expansion.
Shopify Inc.SHOP
Precio / valor razonable
Valor razonable30,7 US$Report-date price142,68 US$
Fecha de evaluación
Ventaja competitivaWide
Cuadro de mando de inversión72 / 100
Intuit Inc.INTU
Precio / valor razonable
Valor razonable464,62 US$Report-date price325,15 US$
