What Is Driving The Move In Synopsys Stock

Synopsys (SNPS) stock rose 12.8% on Thursday, October 1, 2026, a day when the S&P 500 gained 0.2%. The move did not come from a quarterly report: Synopsys held its latest earnings call on August 26, 2026. So what exactly drove this market excitement? Let's unpack below.

Synopsys Stock's Move Followed New Long-Term Targets

The move followed new long-term growth targets, which Synopsys gave at its Investor Day on September 30, 2026. The company said the updated targets reflect accelerating revenue and expanding non-GAAP operating margins. Non-GAAP is the company's own adjusted measure of profit. News reports on October 1 said the stock rose after Synopsys gave fiscal 2027 guidance above estimates. Those reports put the fiscal 2027 revenue target at up to $11.2 billion.

Synopsys also announced two deals on September 30. Amazon's cloud unit agreed to license chip design intellectual property from Synopsys. The multi-year deal is worth more than $1 billion. The second deal is with OpenAI, to develop an AI model for chip design.

The stock rose 4.8% on September 30 itself, and the larger move followed on October 1. Guidance is a forecast, not a result. The stock rose after Synopsys said what it expects to sell in future years, not after it reported what it had sold.

How Big Is Synopsys's New Revenue Target?

At its top of $11.2 billion, the target is about 15% above the top of Synopsys's fiscal 2026 revenue range. On the August 26 call, management guided that year's revenue to $9.69 billion to $9.74 billion.

Recent growth looks faster, but it includes an acquisition. Revenue rose about 42% in fiscal Q3 2026 from a year earlier. That quarter's revenue included about $711 million from Ansys, the simulation business Synopsys bought a year before. Revenue from EDA, the software used to design chips, rose 8.5% in the same quarter.

Fiscal 2026 already includes a full year of Ansys. So Synopsys would have to grow the combined business by about 15% to reach the top of the fiscal 2027 target.

Synopsys Still Keeps 11% Of Sales As Operating Profit

Synopsys kept 11.0% of its sales as operating profit over the last twelve months. The jump in the stock on October 1 did not change that figure. The operating margin was 17.2% a year earlier and 25% the year before that. It has fallen for two years running. This operating margin is not the adjusted, non-GAAP margin the company's targets use.

Two things happened while the margin fell. Synopsys bought Ansys. Management also said on the August 26 call that fiscal 2026 costs include restructuring charges. We cannot say how much of the fall, if any, came from each.

Synopsys stock trades at 87.3 times its earnings of the last twelve months, against 21.4 for the S&P 500. Put simply, you pay about $87 for each $1 of yearly profit.

Synopsys's revenue is growing, and management now targets up to $11.2 billion for fiscal 2027. Operating profit has not kept up with revenue: the operating margin has fallen for two years. Synopsys's fiscal Q4 2026 report will show which way the margin is heading. A twelve-month operating margin above 11.0% would be the first sign that operating profit is starting to follow revenue.

Does This Mean You Should Act On SNPS?

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