10 Tech Stocks with High Upside Potential

3) Synopsys, Inc. (NASDAQ:SNPS)

Average Upside Potential: ~41.0%

Number of Hedge Fund Holders: 72

Synopsys, Inc. (NASDAQ:SNPS) is a leading player in the technology landscape as it specializes in electronic design automation, software security and semiconductor IP. Morgan Stanley analyst Lee Simpson gave a “Buy” rating on the company’s stock, setting a price target of $590.00. The rating is backed by a combination of factors demonstrating Synopsys, Inc. (NASDAQ:SNPS)’s strong performance and strategic positioning. Despite the slowing growth in China, the company showcased strength in other areas, mainly in its hardware segment, supporting it in maintaining FY 2025 guidance. For FY 2025, it expects revenue in the range of $6,745 million – $6,805 million.

Synopsys, Inc. (NASDAQ:SNPS)’s refreshed hardware portfolio drove improved hardware demand, resulting in the positive outlook. The analyst further highlighted that the valuation reflects a premium to the overall semiconductor sector. However, this is justified by Synopsys, Inc. (NASDAQ:SNPS)’s software-centric business model and its exposure to growth areas including AI-enabled tools and digital chip innovation, opines the analyst. Overall, the growth of AI, 5G, high-performance computing and autonomous vehicles continues to increase demand for advanced chip design, fueling adoption of the company’s EDA (Electronic Design Automation) tools and semiconductor IP.

Parnassus Investments, an investment management company, released Q3 2024 investor letter. Here is what the fund said:

“Synopsys, Inc. (NASDAQ:SNPS) plays a crucial role in optimizing semiconductor processing power beyond physical design limits. It benefits from companies like Google and Amazon designing their own chips and the proliferation of AI accelerator development. Its proprietary EDA technology and rising demand for custom chips and AI accelerators should drive durable revenue and earnings growth.”