This article first appeared on GuruFocus.
Nvidia (NVDA, Financials) has taken a $2 billion equity stake in Synopsys, deepening a multi-year collaboration to create AI-accelerated tools for chip design, physical verification and other engineering workflows. The companies announced Monday that the investment includes the purchase of Synopsys shares at $414.79 each, a slight discount to the prior close.
The investment reflects Nvidia’s continued push to embed its AI capabilities across the semiconductor ecosystem. Synopsys will integrate Nvidia’s developer tools and code libraries into applications used to design components for multiple industries. The partnership is nonexclusive: Synopsys also works with AMD, while Nvidia continues to collaborate with rival Cadence Design.
In premarket trade, shares of Synopsys went up 7% on the news, while those of Nvidia went down about 2%. Nvidia has made a lot of big investments this year, such a $5 billion share in Intel and arrangements with OpenAI that might be worth $100 billion. Analysts have voiced concerns about the tight interdependencies that are building in the AI supply chain. However, Nvidia has stressed the strategic importance of working with important software providers.
Synopsys said the collaboration will help address rising complexity and costs in developing AI-driven systems that require deeper integration between electronics and physics. Investors will watch for updates as the companies roll out new tools under the expanded agreement.