Synopsys Earnings on Deck: Can SNPS Turn Green on the Year?

Synopsys' stock (SNPS) is trading at $468.95, up 0.66% ahead of this afternoon's earnings. Markets are keenly awaiting the company's earnings release after the closing bell, with bulls hoping for positive news to potentially drive the stock into positive territory for the year.

Analysts estimate Synopsys will report an EPS of $2.88 for the quarter, a decline on the $3.40 delivered this time last year. Revenue for the quarter is expected to come in at $2.24 billion, a 36.63% increase compared to the same quarter last year.

The upcoming earnings could be crucial for Synopsys, particularly after a tumultuous period marked by both strategic wins and significant challenges. The company's stock price is currently approximately healthily above its 50-day SMA of $438.16 after a 17% gain over the past month, but perhaps crucially trades below its 200-day SMA of $488.19, suggesting a market in conflict.

Recent developments have significantly impacted investor sentiment towards Synopsys. On December 1st, Nvidia announced a $2 billion investment in Synopsys as part of an expanded multi-year collaboration focused on co-developing AI-driven design tools. Nvidia purchased Synopsys shares at $414.79 each, and the announcement triggered a 7% rise in Synopsys shares in premarket trading, showcasing strong initial market approval. This partnership aims to leverage Nvidia’s AI technology for designing advanced products across multiple industries, potentially boosting Synopsys' long-term growth prospects.

However, looking back just last month, and Synopsys announced a major restructuring plan, including laying off approximately 10% of its workforce, ~2,000 employees. This decision, following the $35 billion acquisition of Ansys and earlier missed revenue estimates, aims to redirect resources towards growth opportunities, particularly in artificial intelligence. The company anticipates incurring pre-tax charges between $300 million and $350 million related to severance packages and site closures.

The options market is currently pricing in a share price move of approximately 5.4% following the earnings release, implying a potential price change of about $31.89 per share. Historically, the median move over the past eight quarters has been 3.8%.

The Nvidia investment provides a significant tailwind, but the projected decline in EPS for the quarter raises concerns about near-term profitability. 

With the stock down 3.1% YTD, whether Synopsys can turn green on the year hinges on its ability to deliver a strong earnings report and articulate a compelling vision for future growth, effectively balancing innovation with financial discipline. The market's reaction this week will likely set the tone for SNPS heading into 2026.