Is Synopsys, Inc. overvalued or undervalued?

As of 17 October 2025, the valuation grade for Synopsys, Inc. has moved from attractive to very expensive, indicating a shift towards overvaluation. The company appears overvalued based on its high valuation ratios, including a P/E ratio of 56, an EV to EBITDA of 42.37, and a Price to Book Value of 7.81. In comparison, Microsoft Corp. has a much lower P/E ratio of 36.17, while Oracle Corp. stands at 51.69, both suggesting that Synopsys is priced significantly higher than its peers.
Despite a recent positive performance with a 1-week return of 1.99% compared to the S&P 500's 1.70%, the longer-term returns reveal a concerning trend, with a year-to-date return of -7.77% against the S&P's 13.30%. This underperformance over the past year, coupled with its very expensive valuation metrics, reinforces the conclusion that Synopsys, Inc. is overvalued in the current market.