Piper Sandler moved semiconductor design software firm Synopsys to an Overweight rating from Neutral and bumped its price objective to $550 from $450, citing an improved outlook for the company's intellectual property (IP) business as momentum builds around Intel's foundry strategy.
The brokerage said that sentiment surrounding Intel's 18A-P node - and the potential longer-term opportunity presented by a future 14A process - has brightened in recent months. Piper framed that change in sentiment as creating a more constructive environment for demand of Synopsys' design tools and licensed IP that are integral to advanced chip development.
Analyst Clarke Jeffries referenced reports indicating that Apple may use Intel's manufacturing technology for certain future chips and that Google has selected Intel for about half of its TPU production through 2028. Piper Sandler noted that, if those initiatives proceed, they could stimulate fresh IP licensing and design work that would benefit Synopsys' business.
The firm also argued that ongoing capacity constraints at leading-edge foundries have enhanced the strategic value of Intel's emerging manufacturing offerings. According to Piper, an alternative source of advanced production capacity could ease pressure on constrained facilities elsewhere and support broader semiconductor design activity, creating incremental opportunities for companies that supply EDA tools and IP.
Reflecting these assumptions, Piper Sandler modestly revised its fiscal 2027 forecasts for Synopsys, raising revenue to $10.8 billion from $10.7 billion and increasing its EPS estimate to $17.04 from $16.69. The new $550 price target implies roughly 18% upside from the stock's recent price of $464.58.
Market context and caveats
Piper Sandler emphasized that the upside case depends on the scale and formality of customer commitments to Intel's foundry business. The firm also highlighted that Intel's 14A process remains under development, making activity tied to 18A-P the more immediate potential driver for Synopsys' IP recovery.
Key risks identified by the brokerage include intensified competition in electronic design automation (EDA), a slowdown in semiconductor R&D spending, and the effects of global trade restrictions on cross-border technology flows.
In sum, Piper Sandler sees the combination of potential large-scale Intel foundry programs and constrained capacity at other fabs as supportive for renewed demand in Synopsys' IP franchise, while flagging execution and market-structure risks that could limit upside.