Roth MKM’s AI & Non-AI Stocks To Be Cautious About: 15 Stocks Bank With $60 Billion Capital Raise Is Watching

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

Number of Hedge Fund Holders In Q3 2024: 53

Cadence Design Systems, Inc. (NASDAQ:CDNS) is an upstream semiconductor company that provides design blocks and other items used to design chips. This means that without its products and intellectual property, the semiconductor ecosystem can find it difficult to properly function. Yet, the critical role that Cadence Design Systems, Inc. (NASDAQ:CDNS) plays in the chip ecosystem also means that the firm has to rely on the broader chip industry to perform well. Subsequently, the fact that its stock has gained a modest 15% year-to-date is unsurprising. The weak share price performance has been driven by Cadence Design Systems, Inc. (NASDAQ:CDNS)’s midpoint revenue guidance for several quarters missing analyst guidance. For instance, the firm’s second and third-quarter guidance, given during the previous quarters’ earnings of $1.04 billion and $1.180 billion missed analyst estimates of $1.11 and $1.20 billion. Therefore, Cadence Design Systems, Inc. (NASDAQ:CDNS) has to wait for a broader semiconductor recovery before it generates tailwinds.

Artisan Partners mentioned Cadence Design Systems, Inc. (NASDAQ:CDNS) in its Q3 2024 investor letter. Here is what the fund said:

“Bottom contributors to performance for the quarter included semiconductor design and simulation company Cadence Design Systems, Inc. (NASDAQ:CDNS). Cadence declined due to weaker-than-expected guidance, sensitivity to Cadence’s hardware product cycle in the near term, and uncertainty around China exposure.”