Cadence Design Systems: Strong Results/Guide on Record Backlog and Agentic AI Proof Points Reinforcing Increased EDA Usage Thesis; Reit OW, PT Raised to $420

Cadence’s 3Q26 beat and raise on the FY26 guide point to continued strong chip design activity and monetization of its AI agentic portfolio. 3Q revenue rose 22% y/y and EPS came in above the high end of guidance, with backlog exiting the quarter at a record $8.2B, the fifth consecutive quarter of backlog growth. Core EDA grew 20% y/y, IP 24%, SD&A 30%, and hardware delivered another record quarter, driven by AI/HPC chip and ASIC design activity, advanced-node and chiplet/advanced packaging adoption, and expanded commitments from large semiconductor and systems customers. The updated FY26 outlook implies about 21% revenue growth and $8.40 EPS. Cadence introduced Maestro, a family of AI models built for semiconductor and system design, and now has more than 100 active AI-agent engagements. J.P. Morgan reiterates Overweight and raises its Dec-27 price target to $420 from $405, based on 43x CY27 EPS of $9.85.