Shares of Cadence Design Systems (CDNS) surged 7.12% in Tuesday's pre-market trading following the company's impressive second-quarter earnings report and raised full-year guidance. The chip design software provider's strong performance was largely attributed to robust demand for its AI-driven product portfolio and the recent lifting of export restrictions to China.

Cadence reported Q2 revenue of $1.275 billion, surpassing analysts' expectations of $1.25 billion, representing a significant year-over-year growth of 20%. The company's adjusted earnings per share (EPS) came in at $1.65, beating the consensus estimate of $1.55 and marking a 28.91% increase from the same period last year. Cadence cited "broad-based strength across all businesses" as a key driver for its performance.

Buoyed by its strong results and increasing demand for AI-driven products, Cadence raised its fiscal year 2025 outlook. The company now expects revenue between $5.21 billion and $5.27 billion, up from its previous forecast of $5.15 billion to $5.23 billion. The adjusted EPS guidance was also increased to a range of $6.85 to $6.95, compared to the earlier projection of $6.73 to $6.83. CEO Anirudh Devgan emphasized the company's leading position in the "accelerating waves of the AI Supercycle," which has been driving growth across its product lines.

Adding to the positive sentiment, investors welcomed the news that the U.S. had lifted export curbs on chip design software to China earlier this month. This development allows Cadence to resume sales to the key Chinese market, potentially boosting its future revenue. The company's CFO, John Wall, noted that revenue from China could be "slightly up" year-on-year in 2025, further fueling optimism among investors.