Cadence Design Systems Inc (NASDAQ:CDNS) stock fell 0.83% (As on July 25, 11:37:29 AM UTC-4, Source: Google Finance) after the company raised its full-year revenue forecast to slightly above Wall Street estimates, as a surge in artificial intelligence (AI) innovation fueled demand for custom semiconductor design. However, Cadence’s current-quarter forecast had a midpoint slightly below analyst estimates, sending shares down 4.4% at $230.60 in after-hours trading. The operating margin for the second quarter of 2023 was 42 percent and net income was $334 million, compared to operating margin of 42 percent and net income of $298 million, for the same period in 2022.

CDNS in the second quarter of FY 23 has reported the adjusted earnings per share of $1.22, beating the analysts’ estimates for the adjusted earnings per share of $1.18, according to the Zacks Consensus Estimate. The company had reported the adjusted revenue of $976.6 million in the second quarter of FY 23, beating the analysts’ estimates for revenue of $974.9 million.

Cadence forecast full-year revenue between $4.05 billion and $4.09 billion, largely above analysts’ average estimate of $4.06 billion, according to Refinitiv data. The company’s earlier estimate was for $4.03 billion to $4.07 billion. It expects adjusted earnings per share for 2023 between $5.05 and $5.11, beating expectations of $5.03 per share. The operating margin for 2023 is expected to be in the range of 41.2 percent to 42.2 percent.

But Cadence gave a revenue forecast range of $990 million to $1.01 billion for the current quarter, with the midpoint of $1.0 billion falling slightly below Refinitiv estimates of $1.01 billion. Q3 operating margin is expected to be in the range of 41 percent to 42 percent and net income per diluted share is expected to be in the range of $2.54 to $2.60.

Meanwhile, Cadence has successfully collaborated with Tesla on the development of their game changing Dojo AI supercomputer. Tesla utilized a broad array of Cadence’s solutions across digital, custom / analog, verification, 2.5D/3D-IC and system analysis for developing Dojo Chips and Solutions. And from a product perspective, the company began by providing AI driven solutions for core EDA applications, then expanded the AI portfolio to include system design and analysis, and plan to extend it to life sciences in the future. In Q2, the company has deepened the long-standing partnership with a marquee electronics systems company through a broad ranging expansion of the core EDA, hardware, IP and systems portfolio.