The Catalyst

CDNS absolutely crushed earnings after Monday’s close, and the market responded with conviction—shares ripped 9.8% to $366.56 on massive volume. The electronic design automation leader delivered exactly what the Street wanted: accelerating growth and clear AI leadership.

Why This Matters

Cadence Design Systems reported Q2 revenue of $1.28 billion, beating analyst estimates of $1.26 billion. Even better, adjusted earnings came in at $1.65 per share versus the $1.58 consensus. That’s a 20% year-over-year revenue surge driven by what CEO Anirudh Devgan called “broad-based strength” across all business segments.

The real story here? Cadence is perfectly positioned for the AI infrastructure build-out. Their tools are essential for designing the chips, systems, and data centers powering the AI revolution. With $6.4 billion in backlog and stronger-than-expected bookings, this train isn’t slowing down.

The company’s cash position remains fortress-like at $2.82 billion, giving them flexibility for R&D investments and potential acquisitions. Devgan’s comments about leading through “accelerating waves of the AI Supercycle” weren’t just corporate speak—they’re backed by real numbers.

Technical Setup

CDNS had been consolidating in a tight range between $340-$355 for the past three weeks, building energy for this move. The stock broke decisively above the $355 resistance level on today’s gap up, confirming a classic earnings breakout pattern.

Key observations from the daily chart:

  • Clean break above 50-day moving average at $348
  • Gap above prior resistance becomes new support at $355
  • Volume spike at 154.6% above average confirms institutional buying
  • RSI pushed into overbought territory at 72, but momentum remains strong

Is CDNS Stock a Buy After Earnings Breakout?

The technical picture screams continuation. When a stock gaps up on earnings with this kind of volume, the first pullback to the gap area typically offers the best risk/reward entry. Watch for any dip toward $355-360 as a potential buying opportunity.

Today’s Price Action

The 9:30 AM bell saw immediate buying pressure as traders positioned for the AI momentum trade. CDNS gapped up to $356 and never looked back, methodically climbing throughout the session with only minor profit-taking around lunch.

CDNS Stock Chart Analysis: CDNS 5-minute chart showing steady climb on earnings beat with sustained buying pressure - July 29, 2025

Intraday Highlights

  • 9:30 AM: Gap open at $356, immediate buying on heavy volume
  • 10:30 AM: First push above $360, establishing intraday support
  • 12:00 PM: Brief consolidation around $362, buyers defend pullback
  • 2:00 PM: Afternoon surge breaks $365 on renewed accumulation
  • 4:00 PM: Strong close at $366.26, well above the gap level

Volume Analysis

Today’s volume tells the institutional accumulation story perfectly. We saw 4.2 million shares trade hands—that’s 154.6% above the 10-day average. The heaviest volume came right at the open and during the 2:00 PM push above $365, classic signs of big money positioning.

What’s notable is the lack of heavy selling even as the stock pushed into overbought territory. Profit-takers were quickly absorbed, suggesting institutions are building positions for a longer-term AI play.

Earnings Breakdown

The numbers paint a picture of accelerating growth:

  • Revenue: $1.28B vs $1.26B expected (+20% YoY)
  • EPS: $1.65 vs $1.58 expected
  • Backlog: $6.4 billion (stronger than expected bookings)
  • Cash Position: $2.82 billion

Management’s commentary focused heavily on AI tailwinds across three key areas: AI infrastructure build-out, physical AI in autonomous systems, and emerging science AI applications. This isn’t just one vertical—it’s broad-based adoption.

What Price Target for CDNS Stock?

With the breakout confirmed and fundamentals accelerating, the measured move from the $340-355 consolidation projects to $380-385. That’s conservative given the AI momentum. More aggressive targets sit near $400 if the broader semiconductor rally continues.

Trading Strategy

The gap up changes the game for entries. Chasing above $370 carries risk, but any pullback to the $355-360 gap area offers solid risk/reward for swing traders.

When to Take Profits on CDNS?

  • First Target: $380 (measured move from consolidation)
  • Second Target: $390 (prior 52-week high area)
  • Runner Target: $400 (psychological level if AI momentum continues)

Where to Place Stop Loss for CDNS?

Risk management is straightforward here. A daily close below today’s gap at $355 would negate the breakout. More aggressive traders could use $360 as a tighter stop, right below today’s midpoint.

CDNS Stock Forecast Q3 2025

The setup couldn’t be cleaner for continuation. With earnings momentum confirmed, AI tailwinds accelerating, and the technical breakout in play, CDNS looks poised for the $380-400 range over the coming weeks. The 20% revenue growth isn’t a one-quarter story—this is sustainable given their positioning in the AI ecosystem.

The Bottom Line

CDNS delivered exactly what growth investors wanted: accelerating revenue, expanding margins, and clear visibility into the AI supercycle. The 9.8% surge on huge volume confirms institutions are believers in the story.

The risk/reward favors patient entries on any pullback to the $355-360 gap area. With $6.4 billion in backlog and all business segments firing, this isn’t just an earnings pop—it’s the start of a larger move. The AI infrastructure build-out is still in early innings, and Cadence has the tools everyone needs.