Cadence Design's stock surged 5.23% in pre-market trading on Wednesday, following the company's release of better-than-expected fourth-quarter financial results.

The computational software company reported quarterly adjusted earnings of $1.99 per share, beating the analyst consensus estimate of $1.91. Revenue for the quarter reached $1.44 billion, also exceeding expectations of $1.42 billion. The strong performance was driven by robust demand for the company's AI-driven chip design software, particularly from customers developing complex artificial intelligence processors.

Cadence ended the quarter with a record backlog of $7.8 billion, indicating strong future demand for its electronic design automation tools and IP business. The company also provided optimistic guidance for fiscal 2026, expecting revenue between $5.9 billion and $6.0 billion, which aligns with or exceeds analyst forecasts. CEO Anirudh Devgan highlighted that AI-driven design flows are significantly enhancing customer productivity and helping Cadence maintain its competitive position in the market.