Cadence (CDNS) recently announced that it had expanded its collaboration with Intel's (INTC) chip-manufacturing unit, known as Intel Foundry. Under the deal, Intel will utilize Cadence's AI agents and its Design IP products to enhance “Intel’s next-generation process technologies, beginning with Intel 14A.” The agreement provides evidence that my previous, bullish thesis on Cadence is valid and, together with Cadence's impressive first-quarter results and analysts' bullish view on the shares, makes CDNS stock a buy for growth investors.
About Cadence Design Systems
The company specializes in developing various verification, simulation, and design software and platforms. Based in San Jose, California, Cadence is changing hands with a market capitalization of $107.8 billion and a forward price-to-earnings (P/E) ratio of 63.3x.
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In the three months that ended on the early morning of June 10, the shares had advanced 31%, while they had risen 23% in 2026.
Cadence's AI Agent Appears to Be a Game Changer
In a previous column, I explained that Cadence's AI agent “allows AI chips to be created much more quickly and easily” and “autonomously creates and verifies designs.” I asserted that the product would be a positive game changer because it would "allow chipmakers to meaningfully reduce their costs and raise their profits."
Intel's decision to utilize CDNS' agent suggests that the product is indeed very useful for chipmakers and is likely to significantly move the needle for Cadence's financial results and CDNS stock over the longer term.
Although Stifel, an investment bank, is not as enthusiastic as I am about the agreement, it did call the deal “incrementally positive” for Cadence for a number of reasons. Specifically, Stifel thinks that the partnership provides “validation” of Cadence's agentic AI, will enable Cadence to benefit to a greater extent from the potential growth of Intel Foundry, and looks poised to boost Cadence's longer-term revenue outlook.
The investment bank increased its price target on the shares to $432 from $395 and kept a “Buy” rating on the name.
Cadence Reported Strong Q1 Results
Last quarter, the firm's revenue jumped to $1.47 billion, versus $1.24 billion during the same period a year earlier, while its earnings per share climbed to $1.23, versus $1 in Q1 of 2025. Further, CDNS expects its top line to increase by a robust 17% in 2026, and its backlog rose to a record $8 billion.
“Cadence had a strong start to 2026, delivering a solid Q1 with accelerating AI demand and record backlog, reflecting strong customer commitment to our AI-driven portfolio,” CEO Anirudh Devgan said in a statement. The CEO added that “Cadence is leading the agentic AI transformation in semiconductor and system design.”
Analysts Are Upbeat on CDNS Stock
Analysts on average, and have for at least the last three months, viewed CDNS stock as a “Strong Buy,” with 18 of 23 analysts giving it a “Strong Buy” rating.
In addition to Stifel, Citi is also bullish on the name. Following the company's Q1 results, the latter bank raised its price target on the shares to $400 from $385 and kept a “Buy” rating on the stock.
On the date of publication, Larry Ramer did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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