Cadence Systems could be the most important company you've never heard of. Use the correction now to Einstieg take advantage?
The role of EDA software in chip development
Cadence Design Systems is a leading provider of EDA (Electronic Design Automation) software used by semiconductor companies to develop complex chips and systems. The company benefits greatly from the AI boom, as modern AI chips require extremely sophisticated design tools.
The company provides the software, hardware, services and reusable IP blocks that semiconductor companies and system manufacturers need to design, simulate and verify chips, systems and printed circuit boards.
(An IP block is a reusable, prefabricated functional unit within a chip, such as memory controllers or interfaces like USB or Ethernet)
The invisible engine behind Apple, Nvidia & Co.
Cadence's products are mission-critical in this context. Without them, technology companies would not be able to develop chips - this also applies to industry giants such as Nvidia or Apple.
Cadence helps customers maximize performance, reduce power consumption, shorten development times, increase engineer productivity and reduce costs in design, development and manufacturing.
To understand why Cadence is so important, you need to understand the chip development process.
Chip designers start a project, license proven IP blocks for standard functions and use EDA software to optimize and simulate the chip.
Cadence accompanies this process from the initial design draft through hardware testing to the "tape-out" phase, in which the design is prepared for production. The chips are then manufactured at foundries such as TSMC or Samsung and installed in systems from integrators such as Flex or Foxconn.
The only two companies in the world that can cover the entire design process are Cadence and Synopsys.
Will the momentum continue to increase?
Cadence is usually paid for these services as a license model. This means that if, for example, Nvidia or Apple have developed a chip using Cadence's systems, Cadence subsequently collects a small amount for each sale.
The fact is that the number of developments and the volume of investment in semiconductors has increased massively thanks to KI has increased massively.
Cadence has enjoyed stable double-digit growth for years, has high margins and, thanks to the licensing model, a high proportion of recurring revenue.
This trend is expected to continue in the near future. Profit growth of between 14% and 18% p.a. is expected in the past and coming financial years.
This is a good basis for a decent return. However, it is possible that the growth momentum will continue to increase. It is possible that the consensus estimates are too low.
Outlook and valuation
As we have known for a few hours now, fourth-quarter earnings of USD 1.99 per share were well above expectations of USD 1.90. With sales of USD 1.44 billion, analysts' estimates of USD 1.42 billion were also exceeded.
Cadence was able to increase sales by 14% to USD 5.30 billion and earnings by 20% to USD 7.14 per share in the financial year just ended.
The IP division developed particularly dynamically, achieving growth of almost 25% in 2025.
For the current financial year, Cadence is forecasting an increase in sales from USD 5.30 billion to USD 5.95 billion and a jump in earnings from USD 7.14 to USD 8.05 - 8.15.
As the company already earned USD 1.99 per share in the last quarter and the order backlog has reached a record USD 7.8 billion, this seems plausible
Cadence Systems share: Chart from 18.02.2026, price: USD 283.46 - symbol: CDNS | source: TWS
If the stock now manages to return above USD 300, this could trigger a recovery towards USD 325. Above this level Kaufsignal with possible price targets at USD 340, 358 and 375.
If the share falls below USD 280 on a sustained basis, an extension of the correction to USD 266 or 250 must be expected
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