Synopsys Stock Plummets 35% After Disappointing Earnings and Bleak Outlook

Another tech darling gets a reality check—Synopsys just took a 35% nosedive following weak earnings and guidance that left investors scrambling.

What Went Wrong

The chip design software provider missed targets across the board, with revenue and profit projections falling short of Wall Street's already modest expectations. That 35% drop isn't just a correction—it's a full-blown rout.

Market Reaction

Traders dumped shares at the open, wiping out months of gains in a single session. The semiconductor sector—never known for its stability—just got another reminder that fundamentals occasionally matter.

Looking Ahead

Synopsys now faces mounting pressure to revise its strategy amid slowing demand and increased competition. Because nothing says 'innovation' like missing earnings and watching your stock crater—guess even the tech elite can't algorithm their way out of a bad quarter.

Key Takeaways

• Synopsys reported quarterly earnings and revenue that missed analysts' forecasts as sales for its design intellectual property sank.
• The chip design software maker also gave a weak current-quarter forecast and slashed its full-year outlook.
• Shares lost a third of their value Wednesday and fell into negative territory for the year.

Synopsys (SNPS) shares plunged Wednesday, after the semiconductor design software Maker posted quarterly earnings that missed analysts' expectations and lowered its full-year outlook as demand for its design intellectual property slumped.

The stock was down about 35% in recent trading, dragging it into negative territory for the year.

Synopsys reported adjusted earnings per share of $3.39 for the fiscal third quarter, well below the average estimate of analysts surveyed by Visible Alpha. Revenue ROSE 14% year-over-year to $1.74 billion, but also missed projections.

Sales of its design intellectual property dropped 8% to $427.6 million, and fell from 30.4% of overall revenue to 24.6%. Design automation sales gained 23% to $1.31 billion. 

CEO Sassine Ghazi called it a “transformational quarter,” as the company faced “a challenging geo-political backdrop.” CFO Shelagh Glaser added that Synopsys was "taking a more conservative view of Q4.”

The company said it anticipates current-quarter adjusted earnings of $2.76 to $2.80, below the analyst consensus. It now sees full-year adjusted earnings in the range of $12.76 to $12.80, down from its previous outlook of $15.11 to $15.19.