Cadence Design Systems (CDNS) faces mounting long-term risks, including limited cloud adoption, reliance on on-premise licensing and the industry's shift to consumption-based models, Oppenheimer said Wednesday in a report.

Artificial intelligence presents a dual challenge for Cadance, acting as both a potential disruptor and enhancer of its offerings with emerging AI-native tools, particularly from China, posing competitive threats, Oppenheimer said.

Despite a partial stock rebound, Cadence continues to struggle following disappointing 2025 guidance, the report said. Revenue growth has slowed for three straight years, dropping to an estimated 12% in 2025 from 19% in 2022, Oppenheimer said.

Oppenheimer lowered its price target on Cadence stock to $200 from $225 and maintained its underperform rating, underscoring concerns about the company's ability to adapt to structural shifts in the market.

Cadence shares rose 3.2% in recent trading Wednesday.

Price: 261.87, Change: +7.99, Percent Change: +3.15