Cadence Design Systems, Inc. (CDNS.O): Beat-and-Raise; Agentic AI Monetization Gains Traction

CDNS delivered another beat-and-raise quarter, with 3Q26 revenue of $1.63B (up 22% YoY) above consensus of $1.61B and non-GAAP EPS of $2.11 above consensus of $2.05, driven primarily by IP and a record hardware quarter. The company raised FY26 revenue guidance for the third time this year to $6.4B (up 21% YoY), and guided 4Q26 revenue to $1.71B (up 19% YoY), 4% above consensus, with 4Q26 non-GAAP EPS of $2.22, 9% above consensus. Despite 2026 being a lighter renewal year, agentic AI workflows drove 19% YoY EDA growth via higher consumption of core EDA tools, and with 2027 a larger renewal year we see upside to our 14% EDA growth estimate. IP (15% of sales) is on track to grow ~32% YoY in 2026 and we model 27% in 2027, above consensus of 18%, helped by foundry wins at Samsung and Intel;