CDNS

Cadence

The other half of the EDA duopoly — same essential toolchain, slightly different mix.

WideDecadeRichTech fluent

Longhold

Earnings

Moat

Hold

Ten-year thesis

Hold Cadence for the same structural reason as Synopsys: chip complexity is a one-way street and the design software is a duopoly. System analysis and intelligent system design broaden the story beyond digital ICs. A decade book can own both names; they are not clones in any given year, but they are the same economic argument.

The moat

Identical in kind to Synopsys: switching costs, trained engineers, verification gravity, R&D scale.

Switching costs93

Pain, risk, or retraining required to leave.

Network effects48

The product gets better as more people use it.

Intangibles & IP91

Patents, data, licenses, process knowledge, regulation.

Scale advantage78

Fixed costs spread over a volume rivals cannot match.

Cost advantage68

Structural ability to be the low-cost producer.

Brand70

Pricing power from trust, habit, or identity.

Tech overlay

Pair with Synopsys. If you understand one, you understand the other. Prefer the cheaper on owner-earnings yield when both qualify.

What can break it

Synopsys taking relative share
Export controls
Valuation on both names at once

Earnings path

USD billions, illustrative 2016–2025 series

Owner metrics

P/E

48.0×

P/FCF

42.0×

ROIC

24%

ROE

30%

FCF conversion

92%

Debt / equity

0.30

Gross margin

88%

Op. margin

30%

10y rev CAGR

13%

10y EPS CAGR

17%

Owner earnings

$1.4B

Mkt cap

$74B

Owner earnings yield 1.9%. Yield is judged against quality, not against a single hurdle — a fortress can be fairly priced at a lower yield than a fragile name.

EDASemiconductorsDuopoly