Cadence Design Systems, the Silicon Valley company whose software is used to design nearly every advanced computer chip on the planet, reported third-quarter revenue of $1.633 billion on Monday, up 22% from $1.339 billion a year earlier, as chipmakers race to keep pace with surging demand for artificial intelligence hardware.

Non-GAAP diluted earnings per share came in at $2.11, up from $1.93 in the same quarter last year, according to the company's 8-K filing with the Securities and Exchange Commission. GAAP diluted EPS held flat at $1.05. Recurring revenue, the steady subscription-style income that makes Wall Street love software companies, climbed 18% year-over-year.

The number that caught analysts' eyes, though, was backlog: $8.2 billion in signed-but-unrecognized business sitting on Cadence's books at quarter's end, a company record. Of that, $4.2 billion is expected to convert into revenue over the next 12 months.

Betting Big on "Agentic" AI

Cadence has leaned hard into the idea that AI won't just be designed using its tools — it will increasingly run them. The company pointed to its new Maestro suite of chip-design AI models and its "AI Super Agents" software, which it said is now in active use by more than 100 customers.

"CADENCE IS EXCEPTIONALLY WELL POSITIONED TO CAPITALIZE ON THE TRANSFORMATIONAL AGENTIC AI OPPORTUNITY."

That line, from CEO Anirudh Devgan in the earnings release, echoes a pitch the company has made with growing confidence all year: that the same AI boom driving demand for Nvidia chips and hyperscaler data centers is also driving demand for the design software used to build those chips in the first place.

CFO John Wall credited the quarter's strength to "growing momentum from AI-driven designs" across Cadence's product lines, with every major segment posting double-digit growth.

Raising the Bar

Buoyed by the results, Cadence raised its full-year 2026 guidance. The company now expects annual revenue growth of roughly 21%, landing between $6.387 billion and $6.417 billion, with non-GAAP EPS guided to a range of $8.37 to $8.43. The board also authorized an additional $2.5 billion in share buybacks, signaling confidence the growth has room to run.

Cadence's results land in a stretch where investors have been parsing every earnings report for signs of whether AI-driven capital spending is sustainable or overheating. A design-software company racking up record backlog suggests chipmakers, at least, are still planning years out rather than pulling back.