Cadence Design Systems (CDNS), a maker of electronics design automation software, beat Wall Street’s second-quarter targets and its outlook for the rest of the year on Monday night. But CDNS stock fell in extended trading.
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The San Jose, Calif.-based company earned an adjusted $1.22 per share on sales of $977 million in the June quarter. Analysts polled by FactSet had expected Cadence to earn $1.18 a share on sales of $976 million. Year-over-year, Cadence’s profits were up 13%, while sales were up 14%.
For the second half of 2023, Cadence forecast adjusted earnings of $2.57 per share on sales of $2.07 billion. This is based on the midpoint of its outlook. Wall Street called for a profit of $2.56 a share on sales of $2.06 billion.
“Our second-half revenue outlook represents approximately 15% year-over-year growth, allowing us to raise our 2023 revenue guidance to more than 14% growth over 2022,” Chief Financial Officer John Wall said in a press release.
CDNS stock is a recent breakthrough
In after-hours trading in the stock market today, CDNS stock fell 4.2% to 231.23. In Monday’s regular session, shares fell 0.7% to close at 241.27.
In a written statement, Managing Director Anirudh Devgan called generative artificial intelligence a business driver for Cadence.
Generative AI can create content – including written articles, images, videos and music – from simple descriptive sentences. Artificial intelligence systems analyze and digest large amounts of data to create new works.
“Our focus on AI over the past few years, combined with our expertise in computational software and the invaluable data that is at the heart of AI, uniquely positions us to leverage the enormous potential of this transformative technology,” he said.
On May 25, shares of Cadence broke from a flat base to a buy point of 217.67, according to IBD MarketSmith charts. The breakout came a week after CDNS stock hit that buy point, albeit in below-average trading volume. It reached a record 248.16 on July 20.
CDNS stock is on the IBD Tech Leaders, Big Cap 20 and Long-Term Leaders stock lists.
Cadence ranks first out of 12 stocks in IBD’s computer software design industry group, according to IBD Stock Checkup. CDNS stock has an IBD composite rating of 97 out of 99.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
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