Latest / Felix Nikolas Prehn's Podcast / Felix Prehn - Why Nvidia is Buying This 1 AI Stock (and you should too?) + Stock Market News 04 December 2025

Transcript

Felix Prehn - Why Nvidia is Buying This 1 AI Stock (and you should too?) + Stock Market News 04 December 2025 · Felix Nikolas Prehn's Podcast

• 0:00
  SPEAKER_00: Nvidia destroyed a$2 billion check for one company, not a chipmaker, a software company most people have never heard of, and the stock jumped like 8% that day.
• 0:12
  SPEAKER_00: Every single AI chip NVIDIA makes, every custom processor from Google, Amazon, Apple, they all depend on this one company's software.
• 0:22
  SPEAKER_00: It's the invisible engine behind hundreds of billions of dollars in semiconductors.
• 0:27
  SPEAKER_00: That's what Winston just taught me back there.
• 0:29
  SPEAKER_00: He does all the semiconductor research around here.
• 0:32
  SPEAKER_00: In the next 20 minutes or so, I'm gonna show you why this could be one of the best AI infrastructure plays available.
• 0:40
  SPEAKER_00: My analysts see about a 20% upside from here.
• 0:43
  SPEAKER_00: My name is Felix Breen, that's Winston back there.
• 0:45
  SPEAKER_00: I been an investor banker.
• 0:48
  SPEAKER_00: He just digs around in dirt.
• 0:50
  SPEAKER_00: And I now run the GOAT Academy where we teach over 20,000 students how to become better investors.
• 0:58
  SPEAKER_00: So before we talk about the stock, we need to understand the industry first because that's where the real opportunity sits.
• 1:06
  SPEAKER_00: This company is the picks and shovels of the semiconductor industry.
• 1:11
  SPEAKER_00: They are in EDA, it stands for electronic design automation.
• 1:16
  SPEAKER_00: I know, whatever, boring, but here's what that actually is.
• 1:21
  SPEAKER_00: Imagine if you're building a Lego castle, I used to do that, but you have 50 billion tiny pieces instead of the hundred, and if even one piece is wrong, the whole thing breaks.
• 1:32
  SPEAKER_00: That's basically chip design.
• 1:34
  SPEAKER_00: So EDA software is like super intelligent, well, assistants that help arrange all those billions of pieces perfectly.
• 1:43
  SPEAKER_00: It simulates if it works and it ensures it can actually be made.
• 1:47
  SPEAKER_00: Without this, designing AI chips would be impossible.
• 1:52
  SPEAKER_00: This is roughly a$15 billion market today.
• 1:55
  SPEAKER_00: It's growing about 10% a year.
• 1:57
  SPEAKER_00: Why?
• 1:58
  SPEAKER_00: Because AI chips, custom silicon, 5G electric vehicles, they all need more sophisticated design tools.
• 2:07
  SPEAKER_00: And maybe you're thinking I'm making this up with a billions of dollars.
• 2:10
  SPEAKER_00: Maybe you're thinking I'm making this up with the billions of bits.
• 2:13
  SPEAKER_00: An NVIDIA chip has 80 billion transistors.
• 2:18
  SPEAKER_00: And everybody wants these custom silicon chips.
• 2:20
  SPEAKER_00: We've been talking about Google and Amazon and Microsoft and Tesla and so on, they all design their own, right?
• 2:25
  SPEAKER_00: You have automotive.
• 2:26
  SPEAKER_00: Every self-driving car, it needs perfect custom chips.
• 2:29
  SPEAKER_00: So you've got all these additional growth drivers here.
• 2:33
  SPEAKER_00: But the beautiful thing is that there are only three companies in this entire industry.
• 2:37
  SPEAKER_00: So they control the whole thing.
• 2:39
  SPEAKER_00: You have Synopsis at the top.
• 2:42
  SPEAKER_00: That's the company we're talking about.
• 2:43
  SPEAKER_00: We first talked about that company in 2023, by the way, go back on the channel.
• 2:47
  SPEAKER_00: And I said this business is the picks and shovels of the AI industry, and it went up quite a bit.
• 2:51
  SPEAKER_00: And then it went down, which is again why risk management is always so key.
• 2:55
  SPEAKER_00: And actually, on that note, our flagship mentoring program.
• 2:59
  SPEAKER_00: We're about to pause enrolments on that.
• 3:02
  SPEAKER_00: So we're going to run one more live webinar on Saturday.
• 3:06
  SPEAKER_00: I'll teach you the foundation and give you the opportunity to join if you want to.
• 3:11
  SPEAKER_00: You don't have to, but you can.
• 3:12
  SPEAKER_00: And that'll be it.
• 3:14
  SPEAKER_00: Then for quite a while, there'll be no opportunity to actually join that again in the future.
• 3:18
  SPEAKER_00: So that's something you've been thinking about.
• 3:19
  SPEAKER_00: That's something you want to learn.
• 3:20
  SPEAKER_00: Maybe you just want to show up and learn, then come and join me on Saturday.
• 3:24
  SPEAKER_00: And there's a link down below, FriedrichFrens.org slash webinar.
• 3:27
  SPEAKER_00: I'll be there.
• 3:28
  SPEAKER_00: Winston will be there, and we'll teach you some good old-fashioned rules, Wall Street rules.
• 3:34
  SPEAKER_00: But let's get back to these guys here.
• 3:36
  SPEAKER_00: Synopsis, Cadence, and Siemens.
• 3:38
  SPEAKER_00: Why do we care there are only three companies?
• 3:40
  SPEAKER_00: Look, these companies have what Warren Buffett calls a moat.
• 3:44
  SPEAKER_00: If you're designing a$10 billion AI chip, would you risk switching to unproven software?
• 3:50
  SPEAKER_00: No.
• 3:51
  SPEAKER_00: The switching costs are astronomical.
• 3:53
  SPEAKER_00: It's gotta retrain your team, rebuild your workflows, risk delays, it could cost you billions of dollars.
• 3:59
  SPEAKER_00: So the takeaway is EDA is this small but insanely critical sort of oligopoly-like niche with tons of growth.
• 4:08
  SPEAKER_00: So let's dive a little bit deeper into the one company that Nvidia just gave$2 billion to to see whether we want to co-invest alongside.
• 4:16
  SPEAKER_00: Ticker Symbol is SNPS.
• 4:18
  SPEAKER_00: They are the number one player.
• 4:21
  SPEAKER_00: There are three main businesses.
• 4:22
  SPEAKER_00: Mostly it's that software I was talking about, that's 70% of revenue.
• 4:26
  SPEAKER_00: They also have some IP licensing, stuff like USB controllers, memory interfaces, processor course.
• 4:33
  SPEAKER_00: So you don't have to design them, you just borrow them, pay a fee, save your years to get stuff out there.
• 4:40
  SPEAKER_00: Now they did, by the way, have a software security business, but they're selling that.
• 4:43
  SPEAKER_00: So we're gonna forget about that one because that's not really interesting anymore.
• 4:46
  SPEAKER_00: So what makes these guys a winner?
• 4:48
  SPEAKER_00: There's three simple reasons.
• 4:50
  SPEAKER_00: Synopsis uses their own tools to design their own IP, creates a data flywheel.
• 4:56
  SPEAKER_00: The more IP generates more data, which trains the AI power tools, which makes the tools better, which designs more IP.
• 5:03
  SPEAKER_00: You still with me on this?
• 5:04
  SPEAKER_00: Now, competitors struggle to replicate that.
• 5:07
  SPEAKER_00: The second is they have really, really deep partnerships with TSMC, Samsung, and Intel.
• 5:13
  SPEAKER_00: Those are the foundries, the guys who actually make stuff.
• 5:15
  SPEAKER_00: And MIDI doesn't make stuff, by the way, they just design stuff.
• 5:18
  SPEAKER_00: Well, they pay others to design stuff and then design on top of that.
• 5:22
  SPEAKER_00: So their tools are literally cutting-edge 3 nanometer, 2 nanometer processors certified.
• 5:29
  SPEAKER_00: And to get that kind of certification takes years and years and years, apart from all the money.
• 5:34
  SPEAKER_00: And they have a recurring revenue to stream.
• 5:36
  SPEAKER_00: And this is what I like about these guys.
• 5:38
  SPEAKER_00: 92% of their revenue is recurring.
• 5:42
  SPEAKER_00: Customers sign three-year contracts.
• 5:44
  SPEAKER_00: So this isn't selling uh, you know, there is a phone.
• 5:47
  SPEAKER_00: It's like Netflix, like predictable, sticky, high margin ref.
• 5:52
  SPEAKER_00: But there is more.
• 5:54
  SPEAKER_00: In July this year, they bought ANSIST for 35 billion, who are the leader in physics simulation software for cars, planes, and guess what?
• 6:03
  SPEAKER_00: Semiconductors.
• 6:04
  SPEAKER_00: And that literally doubles, well not doubles, but 50% increases their potential market size.
• 6:11
  SPEAKER_00: So these guys now offer a complete solution.
• 6:15
  SPEAKER_00: Design the chips, simulate it, design the system around it, simulate everything together.
• 6:19
  SPEAKER_00: Total game changer if you're an automotive or in your AI data centers.
• 6:23
  SPEAKER_00: Now, this isn't investing video, not financial advice, but we do have to look at financials, right?
• 6:29
  SPEAKER_00: That's kind of a key thing if you're an investor.
• 6:31
  SPEAKER_00: So let's talk numbers.
• 6:32
  SPEAKER_00: Revenue's gone from 4 billion to about 6 billion in the last three years.
• 6:36
  SPEAKER_00: That's pretty impressive.
• 6:38
  SPEAKER_00: And the margins are big and beautiful, just the way we like them.
• 6:44
  SPEAKER_00: 75% gross margin.
• 6:45
  SPEAKER_00: Net margin is about 30%.
• 6:47
  SPEAKER_00: That's after everybody got paid, right?
• 6:49
  SPEAKER_00: So that's pretty good.
• 6:50
  SPEAKER_00: So software level margins and literally a hardware business.
• 6:54
  SPEAKER_00: And that's really, really, really important here because it shows when you have a sort of when you have a gross margin of 75%, it means you have high switching costs.
• 7:03
  SPEAKER_00: It's difficult for your customers to go somewhere else for the reasons I just walked you through.
• 7:10
  SPEAKER_00: But the big announcement, while you're watching this, you're like feeling scared to the freaking point.
• 7:14
  SPEAKER_00: I get you, I hear you.
• 7:15
  SPEAKER_00: Nvidia announced they are putting$2 billion into Synopsis.
• 7:20
  SPEAKER_00: Gets them about a 2.6% stake at$414 per share.
• 7:25
  SPEAKER_00: If we look at the share price, that gets NVIDIA in down there.
• 7:32
  SPEAKER_00: That's the price.
• 7:33
  SPEAKER_00: We just zoom out, by the way.
• 7:34
  SPEAKER_00: The first time we made a video on Synopsis was here, June 2023.
• 7:38
  SPEAKER_00: Went up very nicely.
• 7:39
  SPEAKER_00: And then it went down a little bit, it went up very nicely, and then it collapsed, which is why you're gonna learn a little bit how to take profits.
• 7:45
  SPEAKER_00: If you don't take profits, uh, you are generally speaking screwed.
• 7:48
  SPEAKER_00: Um, does this look good?
• 7:50
  SPEAKER_00: Yes, actually.
• 7:51
  SPEAKER_00: It's starting to look good.
• 7:52
  SPEAKER_00: People think it's too late.
• 7:54
  SPEAKER_00: In my opinion, it's still very early.
• 7:56
  SPEAKER_00: We're still in high risk land, we're below the 150-day moving average line.
• 8:00
  SPEAKER_00: Um, we still have got some highs to take out here.
• 8:03
  SPEAKER_00: The 50-day moving average line, the yellow one is still sloping down.
• 8:06
  SPEAKER_00: If you want to understand a bit more detail again, come and join me Saturday, FelixFencilg slash webinar.
• 8:10
  SPEAKER_00: But to me, this is still early.
• 8:12
  SPEAKER_00: One thing I always like to snoop out.
• 8:14
  SPEAKER_00: When there is a deal like this, I go into dark pools in Tradevision, I click on trades, and I look at have people been buying this just before the announcement?
• 8:25
  SPEAKER_00: Now these are required to protect my eyes.
• 8:28
  SPEAKER_00: And what do you see?
• 8:29
  SPEAKER_00: Well, it was announced on early December, and just the trading day before that, guess what?
• 8:36
  SPEAKER_00: Two people bought call options on it, but a hundred something thousand dollars.
• 8:41
  SPEAKER_00: So if those guys they paid$56,000 for that, that's$330 per option.
• 8:48
  SPEAKER_00: So what happens if the stock price goes up a lot?
• 8:53
  SPEAKER_00: Well, say we reclaim the sort of$600 highs here.
• 8:56
  SPEAKER_00: Well, how much money do these guys make?
• 8:58
  SPEAKER_00: What do you think?
• 8:58
  SPEAKER_00: Well, they make about 900%, maybe a thousand percent.
• 9:02
  SPEAKER_00: Hence the silly title, the thumbnail, right?
• 9:05
  SPEAKER_00: Literally, whoever did those trades would make a thousand percent bonkers, hey?
• 9:11
  SPEAKER_00: Did somebody know?
• 9:12
  SPEAKER_00: Somebody always knows.
• 9:13
  SPEAKER_00: I'm not implying that whoever did those trades obviously at insider knowledge.
• 9:17
  SPEAKER_00: I'm sure there were, you know, um, just nuns who thought of uh synopsis and thought, why don't we open a brokerage account and put$100,000 into it?
• 9:26
  SPEAKER_00: That's that's the more likely explanation, isn't it?
• 9:28
  SPEAKER_00: Yes, probably.
• 9:29
  SPEAKER_00: Now, what is this partnership actually about?
• 9:31
  SPEAKER_00: Because you need to understand that to be able to assess whether synopsis is something you may or may not want to buy.
• 9:36
  SPEAKER_00: Again, I'm not telling you to buy it, I'm just saying uh basis of your research is here.
• 9:40
  SPEAKER_00: By the way, I'm also giving you a free workbook with this video, which will walk you through all the key bits of data that we're walking through here.
• 9:49
  SPEAKER_00: And um it'll help you absorb this, it'll help you actually learn and understand this.
• 9:54
  SPEAKER_00: You can download that in our free community, FelixFrens.org slash resource.
• 9:59
  SPEAKER_00: I believe.
• 10:00
  SPEAKER_00: The link is also down below in the description.
• 10:03
  SPEAKER_00: Now, what does the partnership deliver?
• 10:05
  SPEAKER_00: Well, it moves synopsis tools from CPUs, where they're currently being run, to GPUs.
• 10:11
  SPEAKER_00: So it could speed up chip design that used to take weeks down to a couple of hours.
• 10:16
  SPEAKER_00: So imagine cutting time to market by like 10x.
• 10:21
  SPEAKER_00: That's billions of dollars.
• 10:23
  SPEAKER_00: And it's maybe also a little sign that NVIDIA is feeling other people are catching up.
• 10:28
  SPEAKER_00: We need to be quicker.
• 10:29
  SPEAKER_00: They're integrating NVIDIA's AI with synopsis tools to create autonomous design.
• 10:35
  SPEAKER_00: It's like an autopilot for chips.
• 10:36
  SPEAKER_00: So the AI basically wakes up in the morning and it goes, well, actually doesn't wake up, it never sleeps.
• 10:47
  SPEAKER_00: Let's find some errors that the humans have missed because they were sleepy, and it just sort of does it on autopilot.
• 10:54
  SPEAKER_00: And then thirdly, it creates a digital twin.
• 10:58
  SPEAKER_00: So it builds out a fully virtual replica of the physical systems, and it uses Nvidia's omnibus for that.
• 11:07
  SPEAKER_00: So it can test an entire data center or entire self-driving car virtually before building anything.
• 11:13
  SPEAKER_00: And that could save years and massive, massive, massive amounts of capital.
• 11:19
  SPEAKER_00: And actually, there's a fourth one, which I didn't add on here, which is equally important.
• 11:22
  SPEAKER_00: They're going to put the whole thing into the cloud.
• 11:25
  SPEAKER_00: So it means a startup could use these systems without having to spend millions and millions of dollars.
• 11:32
  SPEAKER_00: It's just going to speed up the whole thing.
• 11:34
  SPEAKER_00: But why is Nvidia putting two billion on this?
• 11:38
  SPEAKER_00: First, they want to accelerate their own chip design.
• 11:40
  SPEAKER_00: They want to be quicker, right?
• 11:42
  SPEAKER_00: They design the most complex chips on earth.
• 11:44
  SPEAKER_00: So early access to tools means their future chips will come out even faster than their competitors can think.
• 11:53
  SPEAKER_00: Second, they're locking in more designers to NVIDIA tools.
• 11:58
  SPEAKER_00: And that's kind of where it always gets a bit fishy with NVIDIA.
• 12:01
  SPEAKER_00: Is if every designer uses NVIDIA tools, well, they're going to buy NVIDIA GPUs.
• 12:07
  SPEAKER_00: Because the software actually drives the hardware.
• 12:09
  SPEAKER_00: And a lot of people didn't realize that AMD didn't get it, Intel didn't get it, but NVIDIA got it.
• 12:15
  SPEAKER_00: So Synopsis is probably going to go and buy some NVIDIA GPUs.
• 12:19
  SPEAKER_00: That's that's kind of interesting.
• 12:21
  SPEAKER_00: So now how did the market react to this?
• 12:24
  SPEAKER_00: Well, where are we trading right now?
• 12:26
  SPEAKER_00: So I'm recording this, and it can obviously move.
• 12:29
  SPEAKER_00: Doesn't mean it's all over and this video is old and outdated.
• 12:32
  SPEAKER_00: Um 465 is what we're trading right now, right?
• 12:34
  SPEAKER_00: Top of the trading range there yesterday, but of the day, which is rather bullish usually.
• 12:39
  SPEAKER_00: So you've got that immediate, immediate spark up on these on the news, but you're still down, you know, 27%, 28% from um all-time highs here.
• 12:52
  SPEAKER_00: And if you believe that the design chip design world is gonna about to get more competitive, more people entering it, well, then Synopsis should be making more money.
• 13:01
  SPEAKER_00: That's at least the way I see it.
• 13:03
  SPEAKER_00: Yeah, there's some there's some reasons, by the way, for why that stock's down 27%.
• 13:08
  SPEAKER_00: The China restrictions, that was a fair chunk of revenue.
• 13:10
  SPEAKER_00: Takeover deal.
• 13:11
  SPEAKER_00: Wall Street doesn't like takeovers because it's always massively risky and it adds debt and so on.
• 13:17
  SPEAKER_00: And then people were just worried that maybe the whole AI thing was just baloney and it was all over, right?
• 13:23
  SPEAKER_00: That's a thought.
• 13:25
  SPEAKER_00: But why am I bullish on this?
• 13:27
  SPEAKER_00: Look, the NVIDIA investment, it validates synopsis as the platform, the supplier.
• 13:34
  SPEAKER_00: Every single tech giant, the Googles, the Metas, the you know, everybody who's making carrying chips.
• 13:40
  SPEAKER_00: Well, who are they gonna talk to to design them, right?
• 13:44
  SPEAKER_00: And then we're seeing some really nice margin expansion because cloud computing will make it more easy to access what they're offering, and it makes it very profitable because it doesn't cost you very much to run it at that point.
• 13:56
  SPEAKER_00: So Wall Street has a buy rating of$555, which is you know 20 odd percent above where we are right now, which is pretty decent.
• 14:03
  SPEAKER_00: The summer high is high as 650.
• 14:05
  SPEAKER_00: We've got some of the news in here in TradeVision, Citigroup at 580, BNP Paribas, uh Andrew de Gaspari, uh$425.
• 14:15
  SPEAKER_00: He's not a believer.
• 14:17
  SPEAKER_00: He's not a believer.
• 14:18
  SPEAKER_00: Welts Fargo at$550, Rosenblatt at$605.
• 14:22
  SPEAKER_00: So there's some bolds out there on the stock.
• 14:25
  SPEAKER_00: And what you can do, by the way, in TradeVision, you can go into it and you can just turn on uh news alerts on that particular stock, and then you'll get news alerts just on that particular stock, which could be a good thing to do to kind of keep an eye on that.
• 14:36
  SPEAKER_00: Now, what about our strategy looking like here?
• 14:39
  SPEAKER_00: Look, keep positions small.
• 14:40
  SPEAKER_00: I'm not telling you to buy it, I'm just saying small.
• 14:43
  SPEAKER_00: Now, when I say hold, I always say you need risk management around it, because there are plenty of stocks that you know look fantastic in the moment.
• 14:53
  SPEAKER_00: Well, actually, they this didn't look fantastic in the moment, but that um do this, you know, they sort of commit suicide, right?
• 15:02
  SPEAKER_00: So, plug, for example, went down 95%, still is.
• 15:07
  SPEAKER_00: So, by and hold, on individual stocks, in my humble opinion, bad, very bad, very risky.
• 15:14
  SPEAKER_00: But this is an interesting company.
• 15:16
  SPEAKER_00: This is a quality company with quality urgents, earnings, and margins.
• 15:19
  SPEAKER_00: It is not a meme stock, so it is therefore more stable.
• 15:23
  SPEAKER_00: There are some key risks here.
• 15:24
  SPEAKER_00: Take a screenshot, uh, or you know, write it down because um it could be useful.
• 15:29
  SPEAKER_00: But what's the takeaway?
• 15:30
  SPEAKER_00: What's the actual takeaway?
• 15:31
  SPEAKER_00: Look, they are the number one player in EDA.
• 15:35
  SPEAKER_00: You now know what that means.
• 15:37
  SPEAKER_00: Nvidia's putting 2 billion in there validates their technology and what they're doing.
• 15:42
  SPEAKER_00: Um, analyst upside if you care about the sheep.
• 15:44
  SPEAKER_00: So you might want to consider a position.
• 15:46
  SPEAKER_00: I'm not telling you to, you don't have to.
• 15:48
  SPEAKER_00: I'm not invested in this at present in any way, shape, or form.
• 15:52
  SPEAKER_00: Uh, to me, the chart still looks a little bit risky, to be honest.
• 15:55
  SPEAKER_00: And actually, would rather this go up a little bit more.
• 15:58
  SPEAKER_00: Um, because at the moment, as I say, we're still below the 150 to 50-day moving average line, which is a bit of a red flag, generally speaking.
• 16:05
  SPEAKER_00: Whatever happened to my 150-day moving average line.
• 16:08
  SPEAKER_00: Let me hit refresh.
• 16:09
  SPEAKER_00: There it is.
• 16:10
  SPEAKER_00: That sits at 500.
• 16:12
  SPEAKER_00: So you might you might hit a roof here at 500 and then zigzag sideways for a little while.
• 16:16
  SPEAKER_00: So you have to think about whether that's something you want to you want to get into.
• 16:20
  SPEAKER_00: And then, least but not last, come and join me on Friday, because on Saturday, even, because the links down below, Felix Fencilog slash webinar.
• 16:28
  SPEAKER_00: I will be teaching you for the last time in a long time uh how the Wall Street protocol works, which is basically the rules that Wall Street uses, the rules on how they find stocks, the rules on how they identify the right industry and the right companies in a very, very simple manner that takes a couple of hours a week's tops.
• 16:48
  SPEAKER_00: And we've thought that to thought that to thousands of people, we still are, but because we teach one-on-one, we can only teach so many people at the same time.
• 16:55
  SPEAKER_00: Because we want to make sure we can look after people properly.
• 16:57
  SPEAKER_00: So there's a lot of reason we are going to be pausing enrollments in that flagship mentorship program of ours.
• 17:04
  SPEAKER_00: Uh so Saturday will be the last chance to get a glimpse at that, get the rules, and get the last chance to potentially learn from us.
• 17:11
  SPEAKER_00: So I wish you tremendous success.
• 17:14
  SPEAKER_00: I wish you a very festive uh end of year.
• 17:17
  SPEAKER_00: We're getting a bit Christmassy over here, if you can see that.
• 17:20
  SPEAKER_00: Uh, Winston needs a Christmas outfit, clearly.
• 17:23
  SPEAKER_00: And I thank you for watching.
• 17:25
  SPEAKER_00: You got some value out of this?
• 17:26
  SPEAKER_00: Share it with somebody.