Key Takeaways
- Cadence Design Systems boosted its full-year financial outlook, expecting higher revenue and profits.
- Strong demand for its chip design software, fueled by the artificial intelligence boom, is driving growth.
- Despite the positive forecast, concerns about US-China trade tensions and their impact on sales in China caused shares to dip slightly.
- The company reported first-quarter results that met revenue targets and beat profit estimates.
Cadence Design Systems, a key player in chip design software, has raised its revenue and profit forecasts for the year ahead. The company sees continued strong demand from semiconductor firms, especially as the artificial intelligence (AI) sector booms.
Companies developing advanced AI processors rely heavily on sophisticated design tools like those Cadence provides. This surge in AI development is benefiting Cadence, whose customer list includes major names like AI chip leader Nvidia and iPhone maker Apple.
Cadence now anticipates revenue between $5.15 billion and $5.23 billion for 2025, slightly up from its previous estimate. This revised figure aligns closely with what market analysts were expecting, according to data from LSEG, as cited by Yahoo Finance.
The company also increased its projection for adjusted profit per share, now forecasting between $6.73 and $6.83.
“We haven’t seen any change in customers’ behavior at this time, as they continue investing in R&D for their next-gen designs,” CEO Anirudh Devgan stated, highlighting ongoing innovation investment by clients.
However, the positive financial outlook was tempered by investor concerns regarding the company’s business in China. Ongoing US-China trade friction and potential tariffs led to a slight dip in Cadence’s share price after the announcement.
Revenue from China represented about 11% of Cadence’s total in the first quarter, a slight decrease from 12% the previous year. Company executives anticipate that annual revenue from China will likely remain flat.
During a call with analysts, Cadence executives addressed worries about tariffs. They noted that software and services generally aren’t subject to these tariffs and expressed confidence that their diversified supply chain could mitigate impacts on their hardware business.
For the first quarter, Cadence reported revenue of $1.24 billion, matching analyst estimates. Its adjusted profit of $1.57 per share comfortably exceeded expectations. The company’s outlook for the second quarter also met market forecasts.
