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Cadence Rises 27% in a Month: How Should You Play the Stock?

  • May 20, 2025

Cadence Design Systems CDNS stock surged 27.3% in the past month, outperforming the Computer-Software industry, the Zacks Computer and Technology sector and the S&P 500 composite’s growth of 25.3%, 22.6% and 15.3%, respectively.

Price Performance

Cadence Rises 27% in a Month: How Should You Play the Stock?


Image Source: Zacks Investment Research

The trigger has been the company’s stellar first-quarter results, with the stock gaining 12% since April 28. The stock closed last trading session at $320.30 and is now much closer to its 52-week high of $328.99.

So, the question now arises is whether to stay invested or pull out? Can the stock rally further? Let us analyze the stock in detail to ascertain if it is worth investment consideration.

CDNS Boasts Strong Fundamentals

Broad-based demand for its solutions amid robust design activity is a key catalyst. Secular trends like 5G, increasing usage of hyperscale computing and autonomous driving are influencing design activity across semiconductor and systems companies. This is likely to open up opportunities for its end-to-end EDA, IP and systems solutions. The focus on Generative AI, Agentic AI and Physical AI is leading to an exponential increase in computing demand and semiconductor innovation. This bodes well for Cadence.

To capitalize on this opportunity, it has been collaborating with several tech giants, including Qualcomm and NVIDIA Corporation NVDA, on their next-generation AI designs across both training and inference. The company also expanded its partnership with NVIDIA for the latter’s Grace Blackwell architecture to accelerate computing and agentic AI solutions. It is among the first adopters of the NVIDIA Omniverse blueprint for AI-factory digital twins, which will augment data center design and operations.

Cadence is eyeing new AI markets like Life Sciences through its OpenEye drug discovery software. The company is also expanding partnerships with its foundry partners like Taiwian Semiconductor Manufacturing, Intel and Arm Holdings.

Cadence Rises 27% in a Month: How Should You Play the Stock?


Image Source: Zacks Investment Research

Amid rapid AI proliferation, the Cadence.ai portfolio has been gaining momentum along with AI-powered products such as Cadence Cerebrus. The product had more than 1000 tapeouts year to date and 50 new logos in the first quarter.  Going ahead, the company is likely to benefit from customers increasing their R&D spending in AI-driven automation. On the last earnings call, Cadence highlighted that it has not seen any shifts in customers’ behavior presently, as they continue to invest in next-generation designs.

Cadence continues to invest heavily in verification and digital design products, which is helping it to launch products that address the ever-growing needs of electronics and semiconductor companies. The company’s verification business has been gaining traction due to the rising complexity of system verification and software bring-up.

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