Cadence Design Systems (CDNS) Fell Despite Reporting Strong Results

Fred Alger Management, an investment management company, released its “Alger Mid Cap Focus Fund” third quarter 2024 investor letter. A copy of the letter can be downloaded here. U.S. equity markets were favorable in the third quarter of 2024 driven by a dovish monetary policy shift by the Federal Reserve (Fed) and anticipation of a soft economic landing. At the same time, Class A shares of the fund underperformed the Russell Midcap Growth Index in the quarter. In addition, please check the fund’s top five holdings to know its best picks in 2024.

Alger Mid Cap Focus Fund highlighted stocks like Cadence Design Systems, Inc. (NASDAQ:CDNS), in the third quarter 2024 investor letter. Cadence Design Systems, Inc. (NASDAQ:CDNS) is a global provider of software, hardware, services, and reusable integrated circuit (IC) design blocks. The one-month return of Cadence Design Systems, Inc. (NASDAQ:CDNS) was 20.29%, and its shares gained 10.83% of their value over the last 52 weeks. On November 19, 2024, Cadence Design Systems, Inc. (NASDAQ:CDNS) stock closed at $299.63 per share with a market capitalization of $82.177 billion.

Alger Mid Cap Focus Fund stated the following regarding Cadence Design Systems, Inc. (NASDAQ:CDNS) in its Q3 2024 investor letter:

Cadence Design Systems, Inc. (NASDAQ:CDNS) is a leading provider of electronic design automation (EDA) and semiconductor intellectual property (IP) solutions. The company enables global innovation by delivering software, hardware, and services that help engineers design and optimize complex integrated circuits, systems-on-chip (SoCs), and electronic systems. With expertise in areas such as digital design, verification, and AI-driven systems, Cadence serves industries including semiconductor, automotive, aerospace, and consumer electronics, empowering customers to bring cutting-edge products to market efficiently and reliably. Moreover, the company has benefited from increased research & development spending and is increasing its wallet share with existing customers along with adding new ones. During the quarter, the company reported strong fiscal second quarter operating results, where revenues beat analyst estimates. However, the company lowered their fiscal third quarter revenue guidance, citing near-term uncertainty around China sales and the timing of upfront revenue recognition.”

An office of software engineers and designers collaborating on a digital project.

Cadence Design Systems, Inc. (NASDAQ:CDNS) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 53 hedge fund portfolios held Cadence Design Systems, Inc. (NASDAQ:CDNS) at the end of the third quarter which was 64 in the previous quarter. Cadence Design Systems, Inc. (NASDAQ:CDNS) delivered $1.2 billion in revenues in the third quarter and achieved 19% year-over-year growth. While we acknowledge the potential of Cadence Design Systems, Inc. (NASDAQ:CDNS) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

In another article, we discussed Cadence Design Systems, Inc. (NASDAQ:CDNS) and shared the list of trending AI stocks on latest news and analyst ratings. In addition, please check out our hedge fund investor letters Q3 2024 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.