Cadence Design Systems CDNS, a well-known player in the electronic design automation (“EDA”) space, recently reported strong second-quarter 2026 results with a record backlog that underscores sustained demand for its solutions.
Revenues of $1.584 billion beat the Zacks Consensus Estimate by 0.5% and increased 24.2% year over year. The figure was within the management’s guided range of $1.555-$1.595 billion. All the product groups witnessed double-digit growth. Non-GAAP earnings per share (EPS) of $2.11 beat the Zacks Consensus Estimate by 2.9%, increased 27.9% year over year.
Cadence Design Systems, Inc. Revenue (Quarterly)
Cadence Design Systems, Inc. revenue-quarterly | Cadence Design Systems, Inc. Quote
One of the standout factors of this quarter was Cadence’s expanding backlog, which stood at $8.1 billion at the quarter-end. Backlog growth was supported by strong bookings momentum, rising significantly in the first half, highlighting the strength of underlying demand trends.
The Zacks Consensus Estimate for order backlog stood at $7.68 billion.
Record Backlog Underscores AI Tailwinds
AI is driving a major transformation in semiconductor and system design. Cadence is deeply integrated into this shift. Design activity across several verticals, especially data centers and automotive, has been robust due to AI, hyperscale computing and 5G. The focus on Generative AI, Agentic AI and Physical AI has been driving an exponential increase in computing demand and semiconductor innovation. Customers have been significantly increasing their R&D budgets in AI-driven automation.
On the recent earnings call, Cadence added that it is witnessing momentum on both “AI for Design” and “Design for AI” fronts.
The company cited agentic AI as a durable tailwind. Cadence expects agentic tools to drive higher EDA consumption and usage across its platform as customers run more simulations, verification and implementation cycles, thereby expanding the addressable market. Management highlighted “strong early traction” for its AI Super-Agent portfolio.
Cadence Design Systems, Inc. Price, Consensus and EPS Surprise
Cadence Design Systems, Inc. price-consensus-eps-surprise-chart | Cadence Design Systems, Inc. Quote
Cadence’s hardware business also contributed to backlog growth. The demand for new hardware systems continued to gain traction, driven by AI/HPC customers. Apart from hardware, demand for digital full-flow solutions was steady, with expanded adoption of the Tempus and Certus sign-off tools within the Core EDA segment. It added 12 new logos in the reported quarter and expanded business with several AI clients.
Deepening its strategic partnerships with Samsung, Intel, TSMC and OpenAI, among others bodes well.
Overall, Cadence’s record backlog underscores strong demand visibility and reinforces confidence in its growth trajectory. With AI acting as a key catalyst and customer engagements deepening across segments, the company appears well-positioned to sustain momentum.
CDNS’ Upbeat Outlook
Cadence raised its full-year 2026 revenue outlook to a band of $6.26-$6.34 billion, compared with the earlier guided range of $6.125-$6.225 billion. The Zacks Consensus Estimate is currently pinned at $6.29 billion.
Non-GAAP EPS for 2026 is now expected to be between $8.05 and $8.15, compared with the earlier guided range of $7.85 to $7.95. The Zacks Consensus Estimate is currently pinned at $8.03 per share.
CDNS’ Zacks Rank & Stock Price
CDNS carries a Zacks Rank #2 (Buy).
Image Source: Zacks Investment Research
In the past year, shares have lost 8.7% compared with Computer-Software industry’s decline of 31.6%
Other Stocks to Consider in the Same Space
Some better-ranked stocks worth consideration are Keysight Technologies, Inc KEYS, Synopsys SNPS and Commvault Systems CVLT. All stocks carry a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for KEYS’ fiscal 2026 EPS is pegged at $10.17, unchanged in the past 30 days. Keysight’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 9.46%. Shares of Keysight have gained 81% in the past year.
The Zacks Consensus Estimate for SNPS’ fiscal 2026 EPS is pegged at $14.75, unchanged in the past 30 days. Synopsys’ earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, while missing once, with the average surprise being 0.88%. Shares of Synopsys have lost 41% in the past year.
The Zacks Consensus Estimate for CVLT’s fiscal 2027 EPS is pegged at $5.24, up two cents in the past 30 days. Commvault’s earnings beat the Zacks Consensus Estimate in three of the last four quarters, while missing once, with the average surprise of 13.49%. Shares of Commvault have declined 36.6% in the past year.
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