Synopsys Undervalued as Market Overlooks AI Revenue Opportunity, Morgan Stanley Says

11:00 AM EDT, 10/20/2026 (MT Newswires) -- Synopsys (SNPS) remains undervalued as the market overlooks its significant artificial intelligence-driven revenue growth potential, Morgan Stanley said in a note Tuesday. The company trades well below its five-year average valuation despite a recent share price rally, the bank said, adding that it believes this discount is unwarranted given AI-driven growth in the electronic design automation, or EDA, market and the introduction of a consumption-based model alongside traditional licences. At its recent investor day, management outlined three AI frameworks including Full Stack, Customer-Owned Platforms and Agents, and Frontier Models. While these opportunities remain at an early stage, they could significantly expand Synopsys' addressable market, the firm said. "In our view, the next step to a re-rating is execution," it added. The bank forecasts 13% growth in EDA, 15% in Design IP, and 9% in Simulation for fiscal 2027, with an earnings per share estimate of $19.12. Morgan Stanley raised its price target on Synopsys to $574 from $500 and kept its overweight rating. Price: 450.85, Change: -3.73, Percent Change: -0.82