Synopsys to Report Q3 Earnings: What's in Store for the Stock?

Synopsys SNPS is scheduled to report third-quarter fiscal 2026 results on Aug. 26, 2026, after market close.

Synopsys expects non-GAAP earnings per share between $3.63 and $3.69. The Zacks Consensus Estimate for fiscal third-quarter earnings is pinned at $3.67 per share, which indicates a year-over-year increase of 8.3%.

The company anticipates revenues between $2.41 billion and $2.46 billion for the fiscal third quarter. The Zacks Consensus Estimate is pegged at $2.44 billion, which suggests a rise of 40% from the year-ago period's reported figure.

In the trailing four quarters, SNPS’ earnings surpassed the Zacks Consensus Estimate thrice while missing the same on one occasion, with an average surprise of 0.9%.

Factors Influencing Synopsys’ Q3 Results

Synopsys’ fiscal third-quarter performance is likely to have benefited from continued AI-driven demand for semiconductor design and engineering solutions. Management noted that AI is increasing chip complexity, architectural diversity and system-level design requirements, driving demand across EDA, IP, hardware-assisted verification and simulation. Strong AI semiconductor activity, including increased design starts among semiconductor companies and hyperscalers developing their own chips, is expected to have supported SNPS’ top-line growth in the to-be-reported quarter.

Strength in the Design Automation business is likely to have remained a key driver in the third quarter of fiscal 2026. The company continues to see strong demand for advanced-node and 3DIC solutions, while hardware-assisted verification is benefiting from hyperscalers and leading semiconductor customers scaling emulation and prototyping for increasingly complex AI designs. The growing adoption of multi-die and chiplet architectures, along with Synopsys’ leadership in 3DIC design, is expected to aid its third-quarter results.

The Ansys business is also likely to have supported SNPS’ fiscal third-quarter performance. Management noted continued demand for system-level digital engineering and physics-based simulation, with AI data center build-outs driving demand for simulation solutions beyond semiconductors. Growth in aerospace and defense, automotive and industrial applications is also supporting Ansys, particularly as customers increasingly use simulation for complex and intelligent systems, which is likely to have driven SNPS’ top-line growth in the fiscal third quarter.

The Design IP business is expected to have shown sequential improvement in the fiscal third quarter. Management expects sequential growth in the Design IP business throughout the second half of fiscal 2026. Strong demand for high-speed interconnect IP, including PCIe 7.0 and UCIe, as well as memory IP for hyperscalers and AI companies, is likely to aid its third-quarter results.

However, weak design-start activity in industrial and automotive markets might have remained a headwind in the fiscal third quarter. Management said that while customers in these markets are reporting stronger revenue trends, design starts remain muted compared with AI-related activity. China is another concern, as the design-start environment remains challenging due to ongoing restrictions and their cumulative impact. Management has maintained a cautious outlook for China, which might have posed an investor concern in the to-be-reported quarter.

What Our Model Says About SNPS

Our proven model does not conclusively predict an earnings beat for SNPS this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That’s the exact case here.

SNPS has an Earnings ESP of +0.35% and carries a Zacks Rank #3 at present. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Other Stocks to Consider

Here are some other companies worth considering, as our model shows that these, too, have the right combination of elements to beat on earnings in their upcoming releases:

Dell Technologies DELL has an Earnings ESP of +6.42% and carries a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Dell Technologies is slated to report second-quarter fiscal 2027 results on Sept. 1. The Zacks Consensus Estimate for DELL’s second-quarter earnings is pegged at $4.88 per share, down by a penny over the past 30 days, indicating a rise of 110.3% from the year-ago quarter’s reported figure.

Hewlett Packard HPE has an Earnings ESP of +9.96% and carries a Zacks Rank #2 at present.

Hewlett Packard is set to report third-quarter fiscal 2026 results on Sept. 2. The Zacks Consensus Estimate for HPE’s third-quarter earnings is pegged at 94 cents per share, up by a penny over the past 30 days, indicating a rise of 113.6% from the year-ago quarter’s reported figure.

NVIDIA NVDA has an Earnings ESP of +0.92% and carries a Zacks Rank #3 at present.

NVIDIA is set to report second-quarter fiscal 2027 results on Aug. 26. The Zacks Consensus Estimate for NVDA’s second-quarter earnings is pegged at $2.09 per share, unchanged over the past 30 days, indicating a rise of 99.1% from the year-ago quarter’s reported figure.

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This article originally published on Zacks Investment Research (zacks.com).

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