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While the partnership promises to put in motion ambitious plans to co-develop design and engineering solutions across vertical markets, Nvidia’s deepening market reach prompts scrutiny
In sum — what to know:
Nvidia acquires stakes in Synopsys: Nvidia announced that it has invested $2 billion in long-time industry partner Synopsys.
GPU-accelerated AI-powered engineering: The multi-year partnership includes plans to jointly develop design and engineering solutions based on Nvidia’s compute, agentic and physical AI, and digital twin solutions.
Scrutiny over growing influence: With Nvidia’s investment headlines arriving every other week, there’s deepening scrutiny over its growing clout and what seems to be a self-reinforcing flywheel designed to spur AI adoption.
In an announcement Monday, Nvidia revealed that it has acquired $2 billion of Synopsys’ common stock valued at $414.79 each share. The purchase marks a strategic multi-year partnership to co-develop design and engineering solutions across various industries based on Nvidia’s AI technology.
Nvidia’s CEO, Jensen Haung and Synopsys’ CEO, Sassine Ghazi, appeared together on CNBC’s Squawk on the Street to talk about it. “This is a huge deal,” Huang exclaimed. “The partnership we’re announcing today is about revolutionizing one of the most compute-intensive industries in the world: design and engineering,” he said.
In the past months, Synopsys has made a deliberate shift towards adopting Nvidia’s AI technologies including the Nvidia CUDA-X libraries and AI-Physics into its broader portfolio. Their continued collaboration has enabled the EDA company to optimize its compute-intensive applications with a shot of Nvidia’s GPU acceleration.
Under the new deal, the companies expect to cut down simulation times that take weeks on CPUs to hours with a cocktail of GPU-based computing, agentic and physical AI, and Omniverse digital twins — as Synopsys demoed recently at Microsoft Ignite.
For Nvidia, the tie-up will ensure access to vertical markets that Synopsys serves. Huang declared, “we can do basically the entire engineering work inside a computer in a digital twin before we have to built it at all…This is going to expand the market of computing into the world of design and engineering for the very first time.”
In other words, Nvidia will have the opportunity to woo these industries into its ecosystem, away from CPUs that they have relied on before but need something better as they move to adopt AI.
The deal comes as Nvidia makes a series of similar investments on OpenAI, Anthropic, Intel, and Nokia, in an effort to establish its dominion in the AI market. Naturally, the new headline turned quite a few heads.
Unsurprisingly, the bold bet is quelling concerns of circular financing. “This is a coordinated capital strategy. Nvidia is using its balance sheet to shape the market in ways that guarantee demand for Nvidia hardware,” Appledore Research’s Patrick Kelly wrote on LinkedIn. “Call it strategic ecosystem development. Call it vendor financing 2.0. Nvidia is underwriting the AI boom that Nvidia depends on and why not?”
Beyond developing joint go-to-market initiatives and capturing more market share and mindshare, many think this could be a calculated move on the GPU giant’s part to influence competing products in the ecosystem.
Here’s where it starts to get interesting. Synopsys is part of an industry group called Ultra Accelerator Link (UALink) Consortium. The UALink Consortium — run by some of the world’s leading tech players like AMD, Broadcom, Intel, Google, Meta, and Microsoft to name a few, many of which are Nvidia’s rivals — has an open standard interconnect technology for AI computing pods that directly competes with Nvidia’s proprietary NVLink and NVSwitch.
The UALink effort started with AMD and Broadcom’s plan to bring to market a set of ASICs that does more than just connect two components to take on Nvidia’s proprietary GPU interconnects. The deal with Synopsys gives Nvidia substantive equity in the EDA company, sparking debates over whether this could affect Synopsys’ neutrality as a board member.
In an interview with the Network World, Gaurav Gupta, VP analyst at Gartner, admitted that the deal might be unfavorable for the the UALink with Synopsys being a primary IP supplier of the interconnect.
For now, Synopsys refutes all claims of circular financing. The company said that the deal is non-exclusive, and it remains open to working with other chip companies.
“There is no intention or commitment to use that $2 billion to purchase Nvidia GPUs,” Ghazi said during the press conference. “This is something that we do on a normal course of business.”
The announcement followed a predictable market reaction: Synopsys’ shares bumped up by approximately 5%. However, it remains to be seen if that’s an indicator of long-term growth or just a momentary lift. Many likening the deal to that of Intel — where Nvidia invested $5 billion in the struggling rival and got its shares soaring only to drop later — as the pattern this too might follow.
On the flip side, Nvidia’s stocks climbed 1.7% in the aftermath of the announcement — a small boost, albeit — but enough to partially offset the 14% loss it sustained over the past month.
In Q3, Nvidia raked in record revenues of $57 billion, driven by demand for AI infrastructure — reflecting a massive 62% leap year-over-year. The world’s most valuable public company saw a 66% year-over-year increase in revenue in its data center segment alone, with some AI GPU units sold out through 2026.
