Skip NavigationMarketsBusinessInvestingTechPolitics & PolicyVideoWatchlistInvesting Club
PRO
LivestreamMenu
- Cadence President and CEO Anirudh Devgan said AI is a growth driver, not a threat, as increasingly complex chips drive demand for the company’s design tools.
- Devgan sees another major opportunity in “physical AI,” predicting autonomous vehicles, drones and robots will create new demand for specialized chips.
Cadence Design Systems President and CEO Anirudh Devgan said Tuesday AI is a growth driver for the chip-design software company, not a threat.
“A good analogy for AI plus Cadence is like a turbocharger,” Devgan said on CNBC’s “Mad Money.” “Our base tools are like the V6 or V8 engine, and AI by itself cannot do them.”
Shares of Cadence are down 11% over the past year, despite the boom in semiconductors and a solid earnings report in July. The stock has been caught up in the broader software sell-off, as investors worry AI could disrupt traditional software companies. But Devgan argued those fears overlook Cadence’s critical role in designing the increasingly complex chips powering the AI buildout.
“We are an irreplaceable part of the semiconductor industry,” Devgan said.
Cadence provides software and other tools used to design semiconductors and has partnerships with major chipmakers including Nvidia and Intel. Devgan expects demand to grow as chips become more complex and more technology companies design their own custom silicon. Cramer’s Charitable Trust owns shares of both Nvidia and Intel.
“The demand for our products is only increasing, and will continue to increase for the next five to ten years,” he said.
Devgan said AI cannot replace Cadence’s core tools because designing advanced chips — some with 200 billion transistors at three nanometers — requires precise physics and mathematics. Instead, Cadence is incorporating AI into its products to help customers explore more design possibilities and make more efficient chips.
“What the customers want is to improve the performance of the chip. If it’s 3 gigahertz, they want 3.5 gigahertz. If it’s 10 watts, they want 90 watts,” Devgan said. “It’s an optimization problem, and AI can give more scenarios that we can run and improve the performance.”
Beyond the current data-center boom, Devgan sees an even larger opportunity in “physical AI,” which applies artificial intelligence to machines that interact with the real world. He pointed to autonomous vehicles, drones, and robots as major potential markets that will require purpose-built chips and increasingly sophisticated electronics.
“The amount of electronics and semiconductors in the cars is supposed to go up 10x in the next few years, so it creates a lot of new customers,” Devgan said.
He sees an even bigger potential opportunity in robotics, calling humanoid robots “the biggest product category of all time.”
Sign up now for the CNBC Investing Club to follow Jim Cramer’s every move in the market.
Questions for Cramer?
Call Cramer: 1-800-743-CNBC
Want to take a deep dive into Cramer’s world? Hit him up!
Mad Money Twitter – Jim Cramer Twitter – Facebook – Instagram
Questions, comments, suggestions for the “Mad Money” website? madcap@cnbc.com
About The Author
