June 1, 2023, 11:08 am EDT
2023 Actual Trade: SNPS +22% Profits
The Electronic Design Automation industry has been unique as specialized software. It designs and implements software for the IC chip design companies like Apple, Nvidia, AMD, Intel, etc.
After Mentor Graphics was acquired by Siemens (SIEGY), there are only two major publicly traded companies in the EDA industry: Synopsys (SNPS) and Cadence (CDNS). These three companies produced the most tools to automate the design for chips used in smartphones, IPad, laptops, computers, smartwatches, TV, cars, washers & dryers, or almost any device with chips.
Recently, the demand for AI chips surged which created a strong demand for Nvidia (NVDA) and Marvell (MRVL), SNPS, and CDNS to ride the wave higher as well.
As mentioned in our article 01/22 Software Survival List, we bought shares in SNPS on 03/16/2023. But, it did not break out immediately so it was a boring two-month waiting period. Eventually, it took off the ground in mid-May to return +22% profits for us as shown.
We believe that the EDA industry has a solid foundation for long-term growth. As long as the chips are needed, the need would keep coming for these few companies.