Piper Sandler cuts Synopsys and Bentley Systems on growth risks

Investing.com -- Piper Sandler downgraded Synopsys and Bentley Systems, warning that long-running growth drivers at both companies could face pressure in 2026 as industry dynamics shift.

The brokerage cut Synopsys to Neutral from Overweight and lowered its price target to $520, citing concerns that the semiconductor industry’s rapid pivot toward artificial intelligence and high-performance data centre chips is crowding out consumer-focused designs.

Piper Sandler said engineering resources, materials and fabrication capacity are being reallocated to AI workloads, leaving limited incentive for chipmakers to invest in consumer segments such as PCs and mobile devices.

That shift, it said, poses a risk to Synopsys’ roughly $1.75 billion intellectual property business, a key driver that had underpinned expectations of faster growth than EDA peers.

While AI and data centre activity could generate some of the largest engagements in Synopsys’ history, the analysts warned this may come at the cost of slower growth in the company’s broad IP portfolio. They added that uncertainty tied to regulatory approval and earnings dilution from the acquisition of Ansys has largely cleared, but other issues—including China exposure, IP growth and customer concentration—now dominate the outlook.

Piper Sandler said its focus in 2026 will be on whether faster chip development cycles expand demand for EDA tools and whether AI-enabled consumer devices drive a renewed wave of specialised silicon.

The brokerage also downgraded Bentley Systems, pointing to signs that its near-peerless consistency in organic growth may begin to moderate next year. Bentley has delivered about 12% organic annual recurring revenue growth between 2022 and 2025, supported by pricing, named-user expansion, application mix and a growing small- and mid-business segment. Piper Sandler said organic ARR growth in 2026 could slow to around 10%.

While similar deceleration has been seen across vertical software peers, the analysts said Bentley is less likely to respond with an aggressive push on profitability. The company’s roughly 100 basis points of operating income expansion, including stock-based compensation, already reflects solid operating leverage, with recent cost savings reinvested into strategic initiatives.

Piper Sandler cut its price target on Bentley to $45, noting that the stock has fallen about 21% since October and could see a modest rebound as event risk around 2026 guidance clears.

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