We recently published a list of 10 Best Software Infrastructure Stocks to Buy According to Analysts. In this article, we are going to take a look at where Synopsys, Inc. (NASDAQ:SNPS) stands against other best software infrastructure stocks to buy according to analysts.
Companies today allocate significant resources to various aspects of software infrastructure, including servers and data centers for secure data storage and processing, cloud migration and management for scalable environments, network monitoring and management to ensure stability and security, and communication software. Additionally, software delivery and deployment solutions streamline application deployment, while bug tracking and error handling systems manage and resolve software issues. The increasing demand for cloud computing, digital transformation, and the integration of advanced technologies like artificial intelligence and machine learning are expected to drive substantial growth in the global software infrastructure sector. As organizations continue to prioritize agility, scalability, and efficiency, the software infrastructure market is projected to expand rapidly.
According to a January 2025 report by The Business Research Company, the infrastructure software market size is projected to grow from $210 billion in 2024 to $220 billion in 2025, with a growth rate of 5.1%. The market has experienced strong growth in recent years due to spending on legacy system modernization, the increase in remote work, cybersecurity concerns, automation, and application performance optimization. The research firm anticipates continued strong growth, with the market expected to reach around $283 billion by 2029, at a compounded annual growth rate (CAGR) of 6.5%.
Major players in the sector will continue to play a significant role by investing heavily in enhancing their offerings to capture market share. These companies are focusing on developing innovative solutions that leverage AI and automation to improve operational efficiency and enhance the user experience.
Cantor Fitzgerald analyst Thomas Blakey recently initiated coverage of 18 names in infrastructure and artificial intelligence software. In a research note to investors, he highlighted the growing importance of infrastructure software due to the ongoing secular expansion of AI and generative AI. These developments drive the demand for unified, secure, and highly integrated data systems, observable infrastructure, real-time computing and networking capabilities, and enhanced workflows and collaboration. Additionally, the analyst expects cloud infrastructure platforms to be pivotal in consolidating these functions.
Our Methodology
To identify the 10 best software infrastructure stocks, we conducted extensive research to compile a list of fundamentally strong U.S. listed software infrastructure companies with a market capitalization of $2 billion and above. We then ranked the stocks in ascending order of their potential upside, with the stock having highest upside ranked at the top.
Note: All pricing data is as of market close on February 7.
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A close-up of a tech engineer soldering a modern system-on-chip circuit board in a laboratory setting.
Synopsys, Inc. (NASDAQ:SNPS)
Upside Potential: 23%
Number of Hedge Funds: 53
Synopsys, Inc. (NASDAQ:SNPS) is a leading provider of electronic design automation (EDA) software and services, specializing in the development of integrated circuits and systems. The company offers a comprehensive suite of tools that enable designers to create, verify, and manufacture complex semiconductor devices. Synopsys’ solutions are critical for various applications, including automotive, consumer electronics, and artificial intelligence, supporting the design and verification of chips that power modern technology.
Synopsys, Inc. (NASDAQ:SNPS) announced a deal to acquire Ansys (NASDAQ:ANSS) for $35 billion in January 2024, which is still awaiting regulatory approvals and is expected to close in the first half of 2025. Throughout 2024, Synopsys has been rationalizing its product portfolio to gain these approvals. On January 6, 2025, both companies announced the sale of Ansys’ PowerArtist business (a design-for-power platform) to Keysight Technologies Inc. (NYSE:KEYS) as a necessary measure to secure regulatory approval for the acquisition. During the second week of January, Synopsys, Inc. (NASDAQ:SNPS) received Phase 1 approvals from the UK CMA and the European Commission.
The company is well-positioned to benefit from the increasing complexity of semiconductor designs driven by advancements in AI, machine learning, and IoT. With hyperscalers and original equipment manufacturers (OEMs) bringing more of their design flow in-house, Synopsys, Inc. (NASDAQ:SNPS) is expected to see increased demand for its Electronic Design Automation tools and services.
Overall, SNPS ranks 8th on our list of best software infrastructure stocks to buy according to analysts. While we acknowledge the potential of SNPS to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SNPS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.