An Activist Investor Is Taking an Interest in This Nvidia Partner. Its Stock Is Rising.

• Synopsys shares gained Monday following news that activist investor Elliott Investment Management has built a stake in the company.

• Elliott Managing Partner Jesse Cohn said the chip design software maker could be “uniquely positioned to benefit” from developments in AI, and that Elliott looks forward to engaging with Synopsys.

A major Nvidia partner has become the latest target of an activist investor, sending its stock higher Monday.

Elliott Investment Management has taken a multibillion dollar stake in Nvidia (NVDA) partner Synopsys (SNPS), and plans to push the company to make changes aimed at raising its profitability, according to a person familiar with the matter. Shares of Synopsys were up nearly 4% in recent trading, making it one of the best-performing stocks on the Nasdaq following the news.

Elliott Managing Partner Jesse Cohn told Investopedia the chip design software maker could be “uniquely positioned to benefit” from developments in AI, and that Elliott looks forward to engaging with Synopsys.

“Given the essential nature of its platform and these structural tailwinds, we believe there is a clear opportunity for Synopsys’s financial performance to more fully reflect the value it delivers,” Cohn said in a statement.

Synopsys declined to comment on Elliott’s stake. A company spokesperson said its opportunities and product roadmap “have never been stronger” following recent acquisitions, including last year’s $35 billion Ansys deal.

Involvement from activist investors, who tend to push for changes at the companies they invest in, can boost a stock as investors grow more bullish about potential benefits to the business.

Elliott has taken stakes in a wide range of companies in recent years, from PepsiCo (PEP) to Southwest Airlines (LUV), Honeywell (HON), Lululemon Athletica (LULU), and a number of oil and gas companies.

Its support could help boost confidence in Synopsys, which counts AI giants such as Nvidia among its investors and customers. Nvidia announced a $2 billion investment in the company in December. That partnership helped Synopsys shares recover some of their losses in the wake of disappointing quarterly results, though they’ve remained well off last July’s highs.

Even with Monday’s gains, Synopsys shares are still down about 7% since the start of the year.

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