Baird likes Synopsys, Cadence Design as AI adoption may cause faster growth
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Investment firm Baird said on Friday that Synopsys (NASDAQ:SNPS) and Cadence Design Systems (NASDAQ:CDNS) are likely to benefit as the increased adoption of artificial intelligence could boost growth for electronic design automation.
Analyst Joe Vruwink, who has an overweight rating on both Synopsys (SNPS) and Cadence Design Systems (CDNS), said the feeling at the Design Automation Conference was one of optimism, specifically surrounding how semiconductor companies use AI in chip development and how EDA companies can play a part. 
"Pointed comments on the competitive landscape suggest Cadence/Synopsys are best off amongst the 'Big 3' ...we expect this culminates in growth that outpaces the overall market," Vruwink wrote in an investor note. 
Vruwink added that of the two, he prefers Synopsys (SNPS) over Cadence Design Systems (CDNS), given "a likelihood of slightly faster growth" at a more attractive valuation.
Areas where AI and machine learning can help EDA include not only the design flow, but also helping optimize the power, performance and area results, Vruwink said.
Vruwink also said there were some examples of ChatGPT being used to generate code for certain areas of EDA tasks, but right now, it's only able to help with "menial" tasks as it does not have the accuracy, reliability or repeatability to help with production.
Synopsys (SNPS) and Cadence Design Systems (CDNS) were higher in mid-day trading on Friday.
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