S&P Raises Synopsys Rating to BBB+, Expects Mid-Teens Annual Growth
Key Facts
On October 26, 2026, S&P Global Ratings raised Synopsys’ long-term foreign- and local-currency ratings to BBB+ from BBB and revised its outlook to stable from positive. The decision reflects the agency’s review of growth and profitability forecasts following the company’s Investor Day, as well as its established market position and broad earnings base. Investing.com quoted the agency as saying that long-term operating momentum at the chip-design software maker is improving. The upgrade comes amid growth in the AI-related semiconductor sector, but is not based on AI demand alone. The report said the agency raised its annual revenue growth forecast to the mid-teens through 2029, from about 10% previously.
S&P raised its forecast for the 2029 EBITDA margin to 49% from 45%, reflecting improved profitability estimates. Synopsys forecast annual revenue growth of about 15% in fiscal 2027, to $11.15 billion at the midpoint of its guidance range. At Investor Day, the company also set a long-term target for mid-teens revenue growth from estimated fiscal 2026 through 2030, and an operating margin of about 50% in 2030. These forecasts show the broader growth horizon outlined by the company, while the agency based its decision on expected operating momentum and profitability indicators. In its third-quarter fiscal 2026 results, Synopsys reported revenue of $2.477 billion, compared with $1.740 billion in the same period a year earlier.
The company attributed strong third-quarter demand to increasing system complexity and AI computing. In August, it raised its fiscal 2026 revenue forecast to $9.715 billion at the midpoint of its range, citing continued strength in AI-driven demand. Chief Executive Sassine Ghazi said at Investor Day that “AI is creating multiple, mutually reinforcing growth drivers,” adding that the acceleration of advanced intelligence is fueling unprecedented demand for computing capacity. On September 30, the company announced a partnership with OpenAI to develop GPT-Synopsys, a specialized chip-design model combining the partner’s AI technologies with Synopsys tools and electronic design expertise. It also announced a collaboration with TSMC to accelerate AI systems innovation using agentic AI and advanced design.
The operating factors cited in the report include a recent agreement with Amazon to license application-optimized intellectual property, valued at more than $1 billion. Synopsys also expects cost savings from integrating Ansys to reach about $400 million by fiscal 2027, a year ahead of the initial schedule. Management is targeting the return of up to 50% of free cash flow to shareholders through share repurchases. The company announced plans to buy about $1 billion of shares in the months following its September 30, 2026 announcement, subject to market conditions. These plans put shareholder returns alongside integration execution and leverage management, which remains an important factor in the rating trajectory.
In July, S&P kept Synopsys’ rating at BBB but changed the outlook to positive from stable, citing a decline in leverage to 2.3 times. In the current decision, it raised the rating by one notch and affirmed the stable outlook. Investing.com quoted the agency as saying it may consider a further upgrade if the company demonstrates that it can comfortably maintain leverage below two times while managing future acquisitions. This means the prospect of another upgrade depends on sustained financial discipline alongside execution of growth and integration plans. Synopsys shares closed at $430.14 on October 23, according to EL7 data; this was a closing price recorded before the rating decision issued on October 26.