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Upturn AI Summary - About
Cadence Design Systems Inc(CDNS)
Advisory History & Simulated Performance *
*as per simulation (see disclosures)- ALL
- 1Y
- 1M
- 1W
- BUY Advisory
- SELL Advisory (Profit)
- SELL Advisory (Loss)
- Profit
- Loss
- PASS (Skip)
Stock price based on last close Advisory Performance History (Simulated)
Upturn Advisory & Investor View for CDNS
10/26/2026: CDNS (2-star) has a low Upturn Star Rating. Not recommended to BUY.
Cadence Design Systems is a leading provider of electronic design automation (EDA) software and intellectual property used to develop complex chips and electronic systems. The company thrives on high-barrier-to-entry technology, maintaining a strong position in the semiconductor design lifecycle with excellent profit margins. Its primary investment story centers on the rising demand for sophisticated AI hardware and high-performance computing, which necessitates advanced design tools. While the company demonstrates consistent financial performance, investors should monitor risks such as its high valuation, customer concentration, and geopolitical trade tensions. Overall, Cadence is a growth-oriented stock that may best suit investors looking for exposure to the foundational software powering modern silicon innovation.
How to Read the Upturn Advisory
The Upturn Star Rating and the current BUY, SELL, or PASS advisory are generated by Upturn’s AI advisory engine based on proprietary signal analysis, price behavior, advisory history, and historical signal performance.
Company fundamentals, valuation, risks, and news provide supporting context about the business.
Investor Fit
| Investor style | Fit | Why |
|---|---|---|
| Growth investor | Strong fit | Cadence provides essential infrastructure for the secular growth of AI and semiconductors. |
| Momentum investor | Strong fit while signal remains positive | The stock frequently benefits from positive industry trends and high earnings visibility. |
| Value investor | Weak fit | The stock typically trades at a premium multiple reflecting its quality and growth profile. |
| Dividend investor | Weak fit | The company does not pay a cash dividend, focusing capital on R&D and buybacks. |
| Low-risk investor | Mixed fit | While business quality is high, the valuation and cyclical nature of semiconductors can lead to volatility. |
Risk Profile
| Risk factor | Level | Why it matters |
|---|---|---|
| Price volatility | Medium / high | High growth expectations can lead to significant share price swings during market corrections. |
| Valuation risk | High | Premium multiples require consistent execution to avoid potential valuation compression. |
| Competition risk (EDA/AI) | Medium | Strong competition from Synopsys and new AI-native tool entrants requires constant innovation. |
| Business quality | Strong | The company's high recurring revenue and deep integration create a wide economic moat. |
| Dividend income | Low / none | Income-focused investors will not find this stock suitable for yield. |
| Execution risk | Medium | Maintaining leadership requires successful integration of increasingly complex AI and system-level technologies. |
Price Behavior
Strong Uptrend
The stock has maintained a strong upward price trend across the last three quarters.
Moderately Choppy
The stock has experienced noticeable price swings while retaining some directional structure.
Analysis of Past Performance
Type Stock | Historic Profit 2.86% | Avg. Invested days 43 | Today’s Advisory WEAK BUY |
Upturn Advisory Rating  | Upturn Advisory Performance  3.0 | Stock Returns Performance  1.0 |
| Profits based on simulation | Last Close 10/26/2026 |
Upturn Scorecard
Upturn Star Rating 
Company Fundamentals
Financial Health Rating
Growth Momentum Score
Ownership
Top 5 Institutional Investors
Unit Economics (Per $1K Revenue)
Economic Dimensions
Quantitative Style Profile
Style Classification
Quality Focused
Key Highlights
Company Size Large-Cap Stock | Market Capitalization 87.29B USD | Price to earnings Ratio 62.92 | 1Y Target Price 406.24 |
Price to earnings Ratio 62.92 | 1Y Target Price 406.24 | ||
Volume (30-day avg) 2.5M shares | Beta 1.13 | 52 Weeks Range 262.75 - 416.69 | Updated Date 10/25/2026 |
52 Weeks Range 262.75 - 416.69 | Updated Date 10/25/2026 | ||
Dividends yield (FY) - | Basic EPS (TTM) 5.03 |
How Company Makes Money
| Business area | What it includes | Retail investor read |
|---|---|---|
| Product Subscriptions | Time-based licenses for EDA software and hardware emulation platforms. | Most revenue comes from recurring contracts, providing high predictability. |
| Maintenance and Services | Support, updates, and technical consulting services. | Ongoing service fees ensure a steady baseline of cash flow. |
| IP Licensing | Upfront and royalty fees for semiconductor intellectual property blocks. | High-margin licensing adds significant value to the bottom line. |
| Geographic Reach | Global operations with significant exposure to North America, Asia-Pacific, and Europe. | The company is globally diversified, mirroring the international semiconductor supply chain. |
Analyzing Revenue: Products, Geography and Growth
Revenue by Products
Product revenue - Year on Year
Revenue by Geography
Geography revenue - Year on Year
Earnings Date
Report Date 2026-10-26 | When After Market | Estimate 1.61 | Actual - |
Profitability
Profit Margin 23.61% | Operating Margin (TTM) 28.58% |
Management Effectiveness
Return on Assets (TTM) 10.61% | Return on Equity (TTM) 23.23% |
Valuation
Trailing PE 62.92 | Forward PE 31.55 | Enterprise Value 78.53B | Price to Sales(TTM) 14.93 |
Enterprise Value 78.53B | Price to Sales(TTM) 14.93 | ||
Enterprise Value to Revenue 14.5 | Enterprise Value to EBITDA 37.18 | Shares Outstanding 275.82M | Shares Floating 274.17M |
Shares Outstanding 275.82M | Shares Floating 274.17M | ||
Percent Insiders 0.33 | Percent Institutions 91.69 |
Financial Metrics
🧭 Investment Snapshot
Total Revenue (Scale)
Total money earned from selling products or services before any costs. It is needed to understand the scale of the business and its ability to generate income.
Net Income (Profit)
Final profit after all expenses, interest, and taxes are deducted. It is needed to determine the overall profitability available to shareholders.
Free Cash Flow (Cash Strength)
Cash remaining after operating activities and capital expenditures, showing cash available for growth. It is needed to evaluate the company’s ability to invest, pay dividends, or reduce debt.
📈 Growth & Strength
Operating Income (Core Profit)
Profit from core operations after deducting all operating expenses. It is needed to measure how efficiently the company runs its primary business activities.
EBITDA (Cash Earnings)
Earnings before interest, taxes, depreciation, and amortization, indicating operating cash potential. It is needed to compare operating performance across companies without accounting or financing differences.
Gross Profit (Unit Profitability)
Revenue minus cost of revenue, showing profit after direct production costs. It is needed to evaluate core business profitability before overhead expenses.
🛡️ Financial Safety
Cash (Liquidity Buffer)
Total cash and cash equivalents on hand. It is needed to evaluate immediate liquidity and financial flexibility.
Total Debt (Leverage Risk)
Total debt including both short-term and long-term components. It is needed to assess the company’s leverage and financial risk.
Net Working Capital (Short-Term Health)
Current assets minus current liabilities, indicating short-term liquidity strength. It is needed to assess whether the company can meet its short-term obligations.
🧱 Balance Sheet Strength
Stockholder Equity (Net Worth)
Total equity value held by shareholders. It is needed to understand the net worth of the company from the owners’ perspective.
Total Assets (Asset Base)
The full value of everything the company owns, including cash, inventory, equipment, and investments. It is needed to understand the resource base used to generate revenue.
Income Before Tax (Pre-Tax Earnings)
Income before provision for income taxes. It is needed to analyze profitability independent of tax structures.
⚙️ Cost & Drag Factors
Cost of Revenue (Production Cost)
Direct costs required to produce and deliver the products or services sold. It is needed to assess efficiency in production and service delivery.
Total Operating Expenses (Operating Cost)
Indirect costs of running the business such as salaries, marketing, and administration. It is needed to understand how much it costs to sustain ongoing business operations.
Income Tax Expense (Tax Drag)
Amount of taxes paid or payable to the government. It is needed to evaluate the impact of taxation on overall profitability.
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