Chip design software dubbed a $3.7 billion opportunity: 2 stocks poised to benefit

The global semiconductor boom has hit a critical bottleneck in 2026 – a severe shortage of skilled chip design engineers.

Tech giants are increasingly struggling to source human talent as they race to build custom artificial intelligence (AI) silicon.

This has created a historic opportunity for Electronic Design Automation (EDA) firms as they are uniquely positioned to solve the crisis using autonomous “Agentic AI”.

For investors, two names stand out for playing this untapped opportunity, which Goldman Sachs estimates will be worth $3,7 billion (approx. R 63,3 billion) in annual revenue by the end of this decade.

Cadence Design Systems (CDNS): The cleanest pure play

Cadence stock has emerged as a premier darling for investors seeking resilient, ultra-high-margin software growth.

The company enters the back half of 2026 with an outstanding fundamental momentum, supported by a record $8 billion (approx. R 137 billion) order backlog.

CDNS specializes in the incredibly complex process of mapping billions of microscopic transistors onto minuscule silicon footprints – a task now made exponentially faster by its integrated AI design platforms.

Boasting exceptional gross margins of over 85%, the Nasdaq-listed firm offers investors a pristine balance sheet and zero distraction from integration complications.

By automating repetitive engineering task via autonomous design agents, Cadence Design Systems mitigates the talent deficit for its customers, securing its place as an essential, high-margin anchor for any tech-focused portfolio.

Goldman Sachs recently raised its price target on CDNS shares to $470, indicating potential upside of more than 25% from current levels.

Note that Cadence is currently testing its 20-day and 50-day moving averages (MAs), with a clear break above the $379 level expected to sustain upward momentum in the near-term.

Synopsys (SNPS): Unmatched industry scale

Synopsys stock represents the other half of the dominant EDA duopoly – bringing impressive scale and advanced system simulation to the table.

To secure its long-term dominance, the company has aggressively broadened its footprint, notably through its landmark integration of engineering software leader Ansys.

This combined portfolio gives SNPS an unmatched advantage when simulating how complex multi-chip systems behave under heavy artificial intelligence workloads.

While Synopsys currently trades at a premium valuation of about 41x forward earnings and faces post-merger integration adjustments as well, its long-term outlook remains lucrative, which is why Goldman Sachs has a $600 price target on SNPS, indicating a 40% upside from here.

The investment firm acknowledges “near-term risks” – including evolving global export curbs and potential volatility in custom hardware development.

However, Synopsys Inc’s unparalleled reach makes it an indispensable partner for the hyperscalers building out the world's next-generation data centers, making it an ideal long-term compounder.

From a technical perspective, SNPS currently sits a little under its 20-day moving average (MA), with a decisive break above the $446 level expected to accelerate bullish momentum in the near-term.