Nov 29 (Reuters) - Synopsys on Wednesday forecast first-quarter revenue above Wall Street expectations, as artificial intelligence (AI) adoption boosts demand for the company's chip designing software.
Shares of the Sunnyvale, California-based company rose 1.9% in trading after the bell.
Synopsys forecast current-quarter revenue between $1.63 billion and $1.66 billion, above analysts' average estimates of $1.60 billion.
The growing need for faster and more efficient chips that are AI compatible has increased the market prominence for electronic design automation (EDA) firms like Synopsys and Cadence Design System, which provide the building blocks for chip designing.
The rise in custom chip design efforts by firms like Microsoft and Alphabet has also boosted demand.
Synopsys' software tools are instrumental in assisting chip makers like Intel in the semiconductor designing process, and automakers like Mercedes-Benz for the development of electronic control unit for engines.
Synopsys, the largest maker of software used in chip design, said earlier this month that it has worked with Microsoft to create its own chip-design assistant which would help to fix bugs and errors at an early stage.
The company projected full-year 2024 revenue between $6.57 billion and $6.63 billion.
It forecast adjusted earnings per share between $3.40 and $3.45 for the first quarter. Analysts had expected $3.05 per share, according to LSEG data.
Revenue in the fourth quarter ended Oct. 31 rose to $1.60 billion, beating analyst expectations of $1.59 billion. It also beat profit estimates for the reported quarter. (Reporting by Harshita Mary Varghese; Editing by Shailesh Kuber)