Piper Sandler upgraded semiconductor design software maker Synopsys (NASDAQ: SNPS) to Overweight from Neutral, raising its price target to $550 from $450.
The brokerage cited improving prospects for Synopsys’ intellectual property business as Intel’s foundry ambitions continue to gain meaningful traction in the market.
Sentiment around Intel’s 18A-P and future 14A manufacturing nodes has improved significantly in recent months, creating a more favorable demand environment for Synopsys.
Synopsys supplies design tools and IP used in advanced chip development, with its IP segment historically tied to some of Intel’s largest manufacturing programs.
Piper Sandler believes renewed foundry activity could drive a faster-than-expected recovery in Synopsys’ IP segment, representing a key driver behind the upgrade.
Analyst Clarke Jeffries pointed to recent reports that Apple may use Intel’s manufacturing technology for certain future chips as a significant potential catalyst for the company.
Jeffries also noted that Google has selected Intel for roughly half of its TPU production through 2028, adding further weight to the bullish outlook on Synopsys.
If those projects move forward, Piper Sandler expects they could spur new IP licensing and design activity that would directly benefit Synopsys’ top and bottom lines.
The firm argued that persistent capacity constraints at leading-edge foundries have increased the strategic value of Intel’s emerging manufacturing offerings for customers seeking alternatives.
That shift could support broader semiconductor design activity and create incremental revenue opportunities for Synopsys across its licensing and services businesses.
Piper Sandler raised its fiscal 2027 revenue forecast for Synopsys to $10.8 billion from $10.7 billion and lifted its earnings-per-share estimate to $17.04 from $16.69.
The new $550 price target implies approximately 18% upside from the stock’s recent trading price of $464.58, offering investors a compelling risk-reward profile at current levels.
The brokerage cautioned that the scale of upside depends heavily on the scope of customer commitments to Intel’s foundry business materializing as expected.
Piper Sandler noted that Intel’s 14A process remains under development, making 18A-P-related activity the more critical near-term catalyst for Synopsys to watch.
Key risks to the thesis include heightened competition in the electronic design automation space, slower semiconductor research and development spending, and global trade restrictions.
