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The setup
Cadence Design Systems is getting a little pre-earnings pep talk from Rosenblatt, which reiterated a Buy rating and a $360 price target ahead of the company’s Q1 results on Monday, April 27. Shares were already up in early trading, because apparently the market loves a good “we still like it, but here’s what could go wrong” note.
What the Street is watching
The analyst expects Cadence to post revenue of $1.452 billion, up 16.9% from a year ago and just ahead of consensus. That’s the kind of number that says the business is still riding the AI and chip-design wave. But there’s a catch: operating margin and earnings could come in a hair light.
- Non-GAAP operating margin is expected around 43%, below the 44% consensus.
- Non-GAAP EPS is projected at $1.90, just under the $1.92 estimate.
- Hardware-driven verification growth is still expected to run about 16%, which is solid even if last year’s comparison was a little juicier.
Why investors care
Cadence is basically selling the pickaxes for the AI gold rush. The faster chip designs change, the more tools engineers need to keep up, and Cadence has been pitching a product strategy built around shortening those development cycles. If AI model innovation keeps sprinting, Cadence gets to keep selling the software treadmill.
The bigger picture
The note also highlighted Cadence’s acquisition of Hexagon’s simulation business, which could add another revenue engine in 2026. So the story here isn’t just “did they beat EPS?” It’s whether Cadence can keep turning AI chaos into recurring software dollars without margins getting pinched.
Big picture: the stock’s still being treated like a premium AI infrastructure name, but Monday’s print needs to show the growth is real — not just hype with better branding.