🛠️ Engineer The AI Future: Cadence Posts Record Backlog, Eyes Physical AI

Feb 19, 2025

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Welcome, AI & Semiconductor Investors,
Cadence breaks new ground in AI-driven chip design with a record-breaking $6.8B backlog, signaling a bold leap toward “physical AI” at the edge.

We’ll also unpack Fluidstack’s colossal 1GW supercomputing venture in France and Vertiv’s powerhouse Q4 results, so keep reading to see what’s fueling the next wave of AI infrastructure.… Let’s Begin

What The Chip Happened?

🛠️ Engineer The AI Future: Cadence Posts Record Backlog, Eyes Physical AI
🔌 Fluidstack’s Giant Leap into AI Supercomputing
📈 Vertiv Powering Up with Robust Q4 2024 Results

Read time: 7 minutes

Cadence Design Systems (NASDAQ: CDNS)
🛠️ Engineer The AI Future: Cadence Posts Record Backlog, Eyes Physical AI

A 16:9 futuristic illustration showcasing Cadence Design Systems' record backlog and focus on AI-driven innovation. The scene features a high-tech engineering lab with glowing circuit boards and AI-powered design software displaying semiconductor blueprints. A holographic financial chart highlights Cadence’s $6.8 billion backlog and strong Q4 2024 performance. In the background, AI-driven data center infrastructure and edge computing devices represent the company’s push into 'physical AI.' Engineers and robotic arms work collaboratively, symbolizing Cadence’s role in shaping the future of AI hardware and chip design.

What The Chip: Cadence just wrapped up its fourth quarter and full-year 2024 with a revenue beat, strong margins, and a record backlog of $6.8 billion. Management highlighted accelerating opportunities in AI—both in data center infrastructure and the emerging realm of “physical AI” at the edge.

Details:

🔋 Record Backlog & Momentum: Year-end backlog hit $6.8 billion, with President/CEO Anirudh Devgan calling it “exceptional” and noting broad-based expansion in AI, IP, and system design.

🤖 AI Opportunities Everywhere: Cadence is blending AI into its offerings—from Cadence Cerebrus for digital chip design, to Verisium SimAI, to the Allegro X AI platform for PCB automation. Devgan said they’re seeing “promising results” with AI-driven design flows.

🚘 Physical/Edge AI: Management emphasized rising design activity for automotive, aerospace, and other edge-driven applications. Projects with EV makers and advanced packaging suppliers point to strong interest in “physical AI” deployments beyond just data center chips.

💸 Financial Performance: Q4 revenue was $1.356B (vs. $1.069B in Q4’23), with non-GAAP operating margin up to 46%. Non-GAAP EPS hit $1.88 in Q4, up from $1.38 the prior year. For full-year 2024, revenues reached $4.641B (13.5% growth), with non-GAAP EPS of $5.97.

⛓️ Hardware & IP Leading the Charge: Hardware solutions (Palladium Z3, Protium X3) had a record year. IP revenue jumped 28% in Q4, driven by high-bandwidth memory (HBM), DDR, and PCIe, as well as new protocols like UCIe for chiplet-based designs.

🌏 Cautious on China: Despite seeing renewed design activity, Cadence is taking a more conservative China outlook (flat year-over-year) given ongoing export restrictions and general macro uncertainty.

🏭 Outlook Strong for 2025: Management guided full-year 2025 revenue at $5.14B to $5.22B, eyeing further AI-driven expansions in both EDA tool adoption and system analysis. CFO John Wall noted, “We had a strong finish to 2024 … I look forward to building on that strength in 2025.”

Why AI/Semiconductor Investors Should Care: Cadence’s results underscore how electronic design automation and chip IP remain central to the AI revolution—whether in data center accelerators or next-gen vehicles and industrial robotics. With record bookings and continued expansions into physical/edge AI, the company is well-positioned to benefit from escalating chip complexity and new AI-driven design requirements. At the same time, caution around China and macro uncertainties are worth watching, but Cadence’s focus on R&D, AI innovation, and strong backlog mitigates the near-term risk.

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Fluidstack (Private)
🔌 Fluidstack’s Giant Leap into AI Supercomputing

A 16:9 futuristic illustration showcasing Fluidstack's ambitious €10 billion AI supercomputing project in France. The scene features a massive AI supercomputer facility with glowing Fluidstack-branded data centers, interconnected by vibrant energy streams representing low-carbon infrastructure. Holographic overlays highlight the 1GW power capacity and 2026 launch timeline. Engineers and robotic systems manage the advanced AI hardware, while a futuristic French city skyline in the background emphasizes the scale and significance of this AI computing leap.

What The Chip: Fluidstack just announced a massive €10 billion ($10.4bn) plan to build a 1GW AI supercomputer in France, marking a huge step forward in low-carbon, large-scale AI infrastructure. The system is slated to go live by 2026 and could eventually scale beyond 1GW.

Details:

⚡ Massive AI Compute: With “close to 500,000 next-generation AI chips” planned in the first phase, Fluidstack says this will be among the world’s largest AI supercomputers.

🌍 Low-Carbon Energy Source: The French government is on board, leveraging the country’s abundant nuclear energy for stable, carbon-free power.

💶 Hefty Investment: A €10 billion ($10.4bn) fund is earmarked for phase one, with Fluidstack’s financial partners already showing “strong interest.”

🏗️ Purpose-Built Facility: The data center will cater specifically to advanced AI training, potentially creating thousands of skilled jobs in research and infrastructure.

🏢 Strong Partnerships: Recently, Fluidstack signed a separate multi-year deal with French data center operator Eclairion to host Mistral AI’s new training cluster near Paris.

🗣️ Leadership Quotes: “France’s commitment to digital and energy sovereignty makes it the ideal location,” said Cesar Maklary, co-founder and president of Fluidstack. French President Emmanuel Macron echoed that sentiment, touting France as “the leading European country in artificial intelligence.”

Why AI/Semiconductor Investors Should Care: A 1GW AI supercomputer capable of supporting half a million next-gen chips is no small endeavor—this project spotlights Europe’s growing importance in AI infrastructure. For investors, France’s stable, low-carbon energy mix coupled with high-level government backing underscores significant long-term potential for both returns and strategic positioning in the global AI arms race.

Vertiv Holdings Co (NYSE: VRT)
📈 Powering Up with Robust Q4 2024 Results

A 16:9 futuristic illustration showcasing Vertiv’s advanced data center power and cooling infrastructure. The scene features a high-tech Vertiv-branded power management and liquid cooling system integrated into a massive AI-driven data center. Glowing energy streams connect power units to server racks, symbolizing seamless power distribution, while liquid-cooled pipes and advanced cooling towers efficiently regulate temperatures. Engineers and robotic systems monitor holographic dashboards displaying real-time power usage and thermal efficiency metrics. The background includes a futuristic industrial setting, emphasizing Vertiv’s critical role in ensuring reliable and scalable power and cooling for cloud and AI computing.

What The Chip: Vertiv recently unveiled a strong Q4 2024 performance that exceeded expectations, with double-digit organic sales growth and a continued surge in data center infrastructure demand. Executives also reaffirmed bullish guidance for 2025, driven by the boom in cloud, AI, and hyperscale investments.

Details:

🔍 Q4 Highlights: Net sales soared 26% year-over-year to $2.35B, while adjusted operating margin expanded 380 basis points to 21.5%. Adjusted diluted EPS rose 77% to $0.99.

💰 Cash Flow Strength: Adjusted free cash flow hit $362M in Q4, helping net leverage reach about 1.0x, giving Vertiv enough capital flexibility to pursue strategic M&A and share repurchases.

📊 Order Momentum: Trailing 12-month organic orders climbed ~30%—particularly strong in the Americas (up ~50%). CEO Giordano “Gio” Albertazzi noted, “We are more confident in our outlook than ever before.”

🛠️ Technology Investments: Management reiterated commitments to expand R&D (up $50M year-over-year) and manufacturing capacity, exemplified by the recent BSE acquisition that brings high-efficiency chiller technology—key to cooling AI-heavy data centers.

🇺🇸 Tariff Preparedness: While new U.S. tariff talks remain fluid, Vertiv’s diversified supply chain and growing U.S. manufacturing footprint position it to mitigate cost risks. CFO David Fallon stressed, “We have built scenario playbooks to navigate these uncertainties.”

🎯 2025 Outlook: Expecting $9.2B in sales (16% organic growth) and adjusted EPS of $3.50–$3.60. Executive Chairman David Cote stated, “I continue to believe the best is still ahead. We’re well-positioned for long-term growth in this digital age.”

Why AI/Semiconductor Investors Should Care: Rapid adoption of AI and high-density computing is fueling unprecedented demand for advanced power and cooling solutions—and Vertiv’s global scale plus expanded R&D spending aim to capture that wave. Whether inference or training accelerates, these complex data centers require robust infrastructure, making Vertiv a key beneficiary of the ongoing AI and semiconductor boom.

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Disclaimer: This article is intended for educational and informational purposes only and should not be construed as investment advice. Always conduct your own research and consult with a qualified financial advisor before making any investment decisions.

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[Paid Subscribers] Cadence Sets Records with AI-Driven Design Momentum

Executive Summary

Cadence Design Systems, Inc. (NASDAQ: CDNS) closed out 2024 with strong fourth-quarter (Q4) and full-year financial results, posting record backlog figures and delivering on its revenue and earnings per share (EPS) targets. The electronic design automation (EDA) leader reported a 13.5% annual revenue increase to $4.641 billion, with Q4 revenue climbing to $1.356 billion, compared to $1.069 billion in Q4 2023. As President and CEO Anirudh Devgan succinctly stated, “Cadence delivered exceptional results in the fourth quarter, capping off a strong 2024 with 13.5% revenue growth and 42.5% non-GAAP operating margin for the year.”

The company ended 2024 with a record backlog of $6.8 billion and current remaining performance obligations (cRPO) of $3.4 billion. CFO John Wall commented: “We had a strong finish to 2024, driven by broad-based strength across all our businesses…I’m pleased with our record year-end backlog…and look forward to building on that strength in 2025.” Management also highlighted the growing impact of artificial intelligence (AI) on Cadence’s suite of software, hardware, and intellectual property (IP) solutions, providing fresh avenues for the company’s long-term expansion.

Below, we break down Cadence’s latest growth opportunities, key products and technologies, potential headwinds, and a deeper look at the numbers, finishing with a strategic outlook drawn from leadership’s guidance for 2025.

Growth Opportunities

1. AI Infrastructure Buildout
Cadence is tapping into the AI supercycle, particularly in data-center infrastructure and generative AI workloads that demand advanced chip design. Partnerships with marquee customers like NVIDIA and Qualcomm expanded significantly in Q4, as customers prepare next-generation chips optimized for AI. Anirudh Devgan explained, “Cadence is very well positioned to benefit from the various phases of AI, including the current AI infrastructure buildout, applying AI to our own products, and expanding into new markets such as life sciences.”

What The Chip Happened?

🛠️ Engineer The AI Future: Cadence Posts Record Backlog, Eyes Physical AI

[Paid Subscribers] Cadence Sets Records with AI-Driven Design Momentum

Executive Summary

Growth Opportunities

This post is for paid subscribers