$30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley

12. Cadence Design Systems, Inc. (NASDAQ:CDNS)

Number of Hedge Fund Investors  in Q1 2024: 74

Cadence Design Systems, Inc. (NASDAQ:CDNS) is another backend semiconductor manufacturing company that provides chip design services to manufacturers. This means that its hypothesis is similar to that of Synopsys, as its established position allows Cadence Design Systems, Inc. (NASDAQ:CDNS) to benefit from any growth in the demand for semiconductors – whether it is for cars, computers, or humanoid robots. Additionally, like Synopsys, since the firm is a software company and a highly differentiated one at that, it benefits from stable recurring revenue which is somewhat atypical in the highly cyclical semiconductor sector. Cadence Design Systems, Inc. (NASDAQ:CDNS)’s customer partnerships allow it to earn consistent revenue, and it also remains vulnerable to geopolitical tensions that affect the semiconductor industry.

Artisan Partners mentioned Cadence Design Systems, Inc. (NASDAQ:CDNS) in its Q2 2024 investor letter. Here is what the firm said:

“Cadence is a semiconductor design and simulation company that has lower revenue velocity than some investments in our portfolio in part because of its scale, and lower revenue variability because of its recurring revenue model. These revenue characteristics render its high-margin structure less punitive in adverse industry or economic environments.”