BofA’s List Of AI & Semiconductor Stocks That Fund Managers Love & Hate: 16 Stocks On The Manager Radar

4. Synopsys, Inc. (NASDAQ:SNPS)

Number of Hedge Fund Holders In Q2 2024: 53

Section: Gaining Popularity

Synopsys, Inc. (NASDAQ:SNPS) is an American semiconductor design software and products provider. While this exposes the firm to catalysts from the AI sector, these are limited right now. Synopsys, Inc. (NASDAQ:SNPS)’s shares are down up just 0.69% year to date since AI chip design is currently in its early stages and is led mostly by NVIDIA. This means that the firm is exposed to long-term potential catalysts that might surface if industry interest in designing custom AI chips to reduce dependency on NVIDIA grows. Consequently, Synopsys, Inc.’s (NASDAQ:SNPS) hypothesis is more dependent on the current state of the semiconductor industry which includes computers, smartphones, automotive, industrial equipment, and other sectors. All of these are facing the brunt of economic slowdown, making it unsurprising that Synopsys, Inc.’s (NASDAQ:SNPS) shares are flat so far this year. However, the firm has several catalysts lined up. It has signed a deal with TSMC for  AI chips, is acquiring an engineering software firm, has close ties with Intel, and launched an imaging system simulator to improve efficiency by 60x.

TimesSquare Capital Management mentioned Synopsys, Inc. (NASDAQ:SNPS) in its Q1 2024 investor letter. Here is what the firm said:

“We had been trimming Synopsys, Inc. as its market capitalization grew and it approached our price target. This quarter, Synopsys confirmed its plans to acquire ANSYS, Inc. Though the deal has long-term strategic benefits, in the near term we believe that will weigh on overall growth for Synopsys, add notable leverage to its balance sheet, and create more volatility for its shares. As a result, we sold our position.”