Synopsys

Methodology

Synopsys' chip design software generates highly predictable subscription revenue from semiconductor companies requiring EDA tools for every new chip design. Customer lock-in and multi-year contracts create exceptional earnings visibility. The calculation works well for this EDA duopolist with clear recurring revenue characteristics and limited customer churn.

Methodology

Synopsys consistently commands premium PEG ratios reflecting oligopolistic market structure with Cadence, mission-critical software positioning, and secular chip design complexity growth. While expensive on absolute terms, the business quality and AI chip design tailwinds justify valuations. Compare to Synopsys' historical range and Cadence.

Methodology

Synopsys pays no dividend, making PEGY equal to PEG as management prioritizes R&D investments in AI-driven chip design and strategic acquisitions. Capital allocation focuses entirely on technology leadership in EDA tools. For Synopsys, product innovation and market position matter far more than current shareholder income.