Synopsys Inc (NASDAQ:SNPS) stock rose 7.81% (As on May 18, 11:15:35 AM UTC-4, Source: Google Finance) after the company forecast third-quarter profit above Wall Street estimates after posting upbeat second-quarter results as increased use of artificial intelligence and automation boosts the chip-design software firm’s business. The company last month said it had rolled out new AI tools meant to get better results faster through all stages of designing computing chips. Chip firms tend to continue investing in their research and development initiatives even during a semiconductor industry downturn, benefiting companies such as Synopsys.

Synopsys’ electronic design automation division led the company’s revenue growth, delivering $900.8 million in revenue in the quarter, up from $874.3 million in the previous quarter and $787 million in the same quarter last year. Conversely, the company’s design intellectual property business, which came in at $335.2 million, was down from $343.7 million in the previous quarter and $348.5 million this time last year. The company’s adjusted operating margin in the quarter was 33.3%, down from 36.8% in the same quarter of last year. On a non-GAAP basis, net income for the second quarter of fiscal year 2023 was $393.3 million, compared to non-GAAP net income of $390.8 million, for the second quarter of fiscal year 2022.

SNPS in the second quarter of FY 23 has reported the adjusted earnings per share of $2.54, beating the analysts’ estimates for the adjusted earnings per share of $2.48. The company had reported the adjusted revenue growth of 9 percent to $1.4 billion in the second quarter of FY 23, beating the analysts’ estimates for revenue of $1.38 billion.

For its fiscal third quarter, Synopsys said it expects adjusted earnings of $2.70 to $2.75 per share on revenue of $1.465 billion to $1.495 billion. Analysts were expecting $2.70 and $1.48 billion, according to Refinitiv data. For its full fiscal year ending Oct. 31, the company said it expects adjusted earnings of $10.77 to $10.84 per share on revenue of $5.79 billion to $5.83 billion. Analysts had expected $10.58 and $5.79 billion. For the full year, non-GAAP operating margin accretion is expected to be of 150 basis points to 34.5%.

Meanwhile, the company in the quarter had announced Synposys.ai, an expanded suite of artificial intelligence tools to aid in designing, verifying and testing advanced computer chips. The Synopsys.ai EDA suite is said to help accelerate chip design with solutions for functional verification and silicon testing, with more capabilities to be added later.