Cadence Design Systems (CDNS)

AI disruption won't hit them as hard as other companies. They posted a fine quarter: EPS and revenue beat while guidance was higher.

She added more. Is not worried that AI will disrupt/replace them. These tech stocks ran up a lot coming into this quarter. Happy to buy it at 35X PE for the long term.

They still lead in providing the software to design semis. They continue to grow market share. Also has a strong balance sheet. Is undervalued now.

12-month price target is $375, and he'd probably write some call options on it. Elephant in the room is SNPS, which has taken off since its purchase of a British firm. 

It got hit when the AI trade went out of style and after tariffs, but has rallied 20% in the last month. Also, they just delivered a strong beat and raise quarter.

Is -14% after they reported a solid quarter with conservative guidance, as more concerns for AI data centres emerged. Near its 52-week low, so maybe it's a buy on weakness.

A competitor to SNPS. Software that helps the likes of NVDA and AMD design their chips. 12-month price target of $332. Extremely well known in Europe. A number of joint ventures. Financials have been great, consistently beat on top and bottom. Raised guidance a tiny bit. Buy in thirds here around $270, $260s, and just under $250. No dividend.

She owned this at $50 and is now $269, so she trimmed to take profits. Are well-positioned for the long term, but the PE is not cheap.

They produce software that helps semis companies design their chips used and to help design advanced automotive and new drugs. Their platform helps makes the most-advanced chips in AI. Is up 43% in the past year. They reported a mixed quarter in April; shares dipped but have hung in. A great company.

They just disclosed a Dept. of Justice probe, but that changes nothing. They use software to develop semi chips related to AI, a story that won't go away. The DOJ news is its first, small mistep. Happy to own it.

They make software for semi companies to make chips. Prospects look strong with the semi business coming out of a down cycle. They carrry more cash than debt.

CDNS has a strong track record of execution and is now trading at 44x times' Forward P/E (historical averages in the last five years ranging from 27x – 46x). Revenue and EBITDA have been consistently growing at around 13% and 20%, respectively. The balance sheet is solid, with net cash of around $200M. The company is generating tons of cash and returns most of it through repurchases, which we like. The Q1 was mixed, but it raised guidance, underlining the belief that the company benefits from secular trends fueling demand for its software and other tools used to design semiconductors. This is despite weaker end-market demand for some chips and tightened US export laws aimed at China. Trends are sparking more, and more complicated, chip designs that are critical to customers' R&D initiatives. Operating margin fell in 1Q vs. the prior year on a tough comparison, yet it should rise for the year on more revenue and Cadence's strong competitive position. Upfront sales (20% of total in 1Q), such as hardware and some IP products, can create lumpiness in revenue. Overall, we like the name, momentum looks good, and the company has a track record of consistent growth and shareholder-friendly policies over the last few years. Having said that, it is rarely trading cheaply given, CDNS’s valuation is at a premium level compared to peers and the market most of the time, which already reflects the high quality of the business. We would be nibble here and there and averge into the position over time.
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They make software that helps semis companies design their chips. Is up 382% in the past 5 years, outperforming the market. Up 27% YTD even after pulling back the past month. A great semis stock you haven't heard of.

They're a dominant player in chip design software. Shares have been up 27% since October. They continue to execute in a difficult environment.