Analyst(s): Brendan Burke
Publication Date: February 27, 2026
Synopsys Q1 FY 2026 earnings reflect strong execution driven by AI-focused semiconductor design activity and a seasonally strong Ansys contribution. The results underscore Synopsys’ positioning around AI-driven engineering workflows and silicon-to-system integration.
What is Covered in This Article:
- Synopsys’ Q1 FY 2026 financial results
- AI-led design automation and hardware momentum
- Ansys integration and system-level engineering demand
- AI disruption positioning and competitive moat
- Guidance and capital allocation
The News: Synopsys, Inc. (NASDAQ: SNPS) reported Q1 FY 2026 revenue of $2.409 billion, at the high end of prior guidance, up 66.0% year-on-year (YoY), compared with Street consensus of $2.39 billion, representing an upside of approximately 0.8%. Non-GAAP EPS of $3.77 came in above prior guidance. Design Automation revenue was $2.0 billion, up 96.0% YoY, while Design IP revenue was $407.0 million, down 6.5% YoY. Non-GAAP operating income was $1.0 billion, up 91.0% YoY, with a non-GAAP operating margin of 42.1%. Non-GAAP net income was $718.5 million (Q1 FY 2025: $473.2 million). Backlog ended at $11.3 billion, underscoring the resilience of Synopsys’ business model. Ansys revenue of $886 million reflects broad-based robust demand in a seasonally strong quarter, driven by system-level digital engineering, multi-physics simulation, and AI-enabled design workflows.
“Synopsys enters 2026 with an expanded portfolio, leadership positions across the business, and the most compelling roadmap in our history,” said Sassine Ghazi, President and CEO of Synopsys. “AI continues to fuel robust system-level and semiconductor R&D, and the increasing AI capabilities throughout our portfolio strengthen our strategic advantage and accelerate our customers’ innovation.”
Synopsys Q1 FY 2026 Earnings Highlight EDA and Ansys Momentum
Analyst Take: Synopsys’ Q1 FY 2026 results reflect a clear bifurcation across its portfolio, with AI-driven design automation and system-level simulation offsetting weaker conditions in consumer, automotive, and industrial design starts. The quarter benefited from a seasonally strong Ansys contribution, reinforcing the strategic rationale behind the acquisition. Management commentary emphasized that AI is amplifying, rather than disrupting, Synopsys’ competitive position by driving productivity gains across design and verification workflows. At the same time, Design IP remains in a transitional phase, with near-term pressure balanced by longer-term structural drivers. Overall, the quarter reinforces Synopsys’ positioning as a core enabler of AI infrastructure and digital engineering transformation.
AI-Driven Design Automation and Hardware Momentum
Design Automation performance was driven by continued strength in hardware-assisted verification and advanced-node design activity tied to AI compute programs. Management highlighted competitive emulation wins at leading AI high-performance computing customers, including a marquee emulation win versus the incumbent at a leading AI HPC customer, and expanding demand for hybrid emulation and prototyping systems supporting both emulation and prototyping use cases. The company cited customer productivity gains of up to 50% faster knowledge assistance, up to 70% faster workflow assistance, and up to five times faster formal testbench generation using Synopsys.ai capabilities.
Management noted that AgentEngineer technology is advancing rapidly, with several customer engagements underway with agents across design and verification, paving the way for autonomous engineering workflows with increasing levels of autonomy. One highlight was receiving World Economic Forum honors for Synopsys’ work with AMD to advance AI-accelerated chip design. Adoption of multi-die design accelerated, with leading semiconductor and foundry customers leveraging the 3DIC compiler platform with automation and AI-driven optimization to improve signal and power integrity quality of results, enhance thermal efficiency, and speed up design convergence. Advanced node momentum remained strong, with digital flows including Fusion Compiler and PrimeTime achieving 100% usage on critical tape-outs at two-nanometer and below. These trends reinforce Synopsys’ central role in AI-driven silicon design complexity.
Addressing AI/SaaS Disruption Concerns
CEO Sassine Ghazi directly addressed market concerns regarding whether AI will disrupt established software companies. His commentary positions Synopsys as fundamentally different from horizontal enterprise software vendors vulnerable to AI substitution:
“Our deep tech solutions power the world’s most complex engineering efforts. Synopsys’ decades of deep domain expertise, proprietary code-bases and solvers, and native foundry design technology co-optimizations deliver optimal, deterministic, silicon-proven results that probabilistic AI models do not replicate.”
Synopsys’ EDA tools produce deterministic, silicon-proven outcomes required for chip fabrication where approximation is not acceptable. Unlike productivity software, where AI can substitute for human workflows, semiconductor design automation requires verified correctness at the physical level. Rather than being disrupted, Synopsys is embedding AI as a force multiplier across its product suite, pioneering AI-driven design capabilities that deliver orders-of-magnitude productivity gains while advancing toward AgentEngineers with increasing levels of autonomy. As Ghazi summarized: “AI isn’t disrupting our business; it’s amplifying our strategic advantage.”
Ansys Integration Expands System-Level Engineering Reach
Ansys delivered a strong Q1 FY 2026, contributing approximately $886 million in revenue, supported by robust demand for system-level digital engineering, multi-physics simulation, and AI-enabled design workflows. Management cited large multi-year agreements across aerospace, hyperscale, industrial, and automotive sectors. With Ansys as part of Synopsys, the company now supports more than 90% of the top 100 automotive suppliers. At CES in January, Synopsys showcased how AI-driven simulation is helping customers like Audi reduce physical prototyping and shorten development cycles. Management emphasized the growing engineering transformation away from physical testing towards digital twins, noting that companies are investing in advanced design automation, simulation, and digital twins as a competitive imperative.
The combined Synopsys plus Ansys portfolio is increasingly mission-critical to industries spanning semiconductors, aerospace, mobility, energy, and advanced manufacturing. Management’s confidence in the business is increasing as global demand for electrification, autonomy, digital twins, advanced semiconductor design, and mission engineering remains resilient and continues to expand. The Ansys integration is well underway, with teams coming together at pace. The upcoming Synopsys Converge Conference in March is expected to showcase the technology promise of the combined portfolio.
Design IP Transition and Portfolio Focus
Design IP revenue of $407 million was down approximately 6% YoY and flat sequentially, performing in line with expectations. Management reiterated that FY 2026 is a transitional year for the IP business, with the company focused on aligning with the fastest-growing segments of the silicon market. The planned sale of the processor IP solutions business to GlobalFoundries sharpens Synopsys’ focus on extending leadership positions in interconnect and foundation IP.
In Q1, Synopsys achieved more than 40 PCIe design wins with HPC and automotive customers, achieved an industry-first demonstration of PCIe 8.0, and established a first-to-market position with 224G SerDes on advanced nodes and leading foundries with 10 lifetime wins. The company continues to expect muted FY 2026 growth in IP with sequential improvement given its roadmap and sales pipeline. Longer-term, management cited several structural tailwinds: global expansion of foundries and accelerated node transitions, interconnect standards advancing at an unprecedented pace, and increasing demand for chiplets and subsystems.
Guidance and Final Thoughts
Synopsys reiterated full-year FY 2026 revenue guidance of $9.56 billion to $9.66 billion (consensus: $9.63 billion) and raised non-GAAP earnings per share guidance to $14.38 to $14.46 (prior: $14.32 to $14.40), supported by lower net interest expense and disciplined cost execution. Q2 revenue is expected to be $2.2 billion to $2.3 billion, broadly in line with consensus, while non-GAAP earnings per share guidance stands at $3.11 to $3.17. Management emphasized continued investment in AI-driven engineering capabilities, integration execution, and balance sheet flexibility following the repayment of term loans.
Synopsys’ direct exposure to AI-led design complexity at advanced nodes positions it favorably as the multi-trillion-dollar AI infrastructure buildout continues. Management’s framing of AI disruption is strategically important. Unlike horizontal SaaS vendors, where AI may compress seat-based revenue, Synopsys’ deterministic, silicon-proven EDA tools occupy a domain where AI augments rather than substitutes. The company’s investment in Synopsys.ai, AgentEngineer technology, and AI-driven simulation positions it to capture incremental value as engineering workflows become increasingly autonomous. The Synopsys Converge Conference in March should provide further visibility into the combined portfolio’s technology roadmap and go-to-market execution.
See the full press release on Synopsys’ Q1 FY 2026 financial results on the company website.
Disclosure: Futurum is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of Futurum as a whole.
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Author Information
Brendan is Research Director, Semiconductors, Supply Chain, and Emerging Tech. He advises clients on strategic initiatives and leads the Futurum Semiconductors Practice. He is an experienced tech industry analyst who has guided tech leaders in identifying market opportunities spanning edge processors, generative AI applications, and hyperscale data centers.
Before joining Futurum, Brendan consulted with global AI leaders and served as a Senior Analyst in Emerging Technology Research at PitchBook. At PitchBook, he developed market intelligence tools for AI, highlighted by one of the industry’s most comprehensive AI semiconductor market landscapes encompassing both public and private companies. He has advised Fortune 100 tech giants, growth-stage innovators, global investors, and leading market research firms. Before PitchBook, he led research teams in tech investment banking and market research.
Brendan is based in Seattle, Washington. He has a Bachelor of Arts Degree from Amherst College.
