Wall Street is starting to position itself for the next AI investment boom, with Citigroup betting that EDA software will be the strongest theme.

In a recent research report, Citigroup provided stock ratings and 12-month target price coverage for two major EDA giants—Synopsys and Cadence—and gave both leaders in EDA chip design software a "Buy" rating. Citigroup's analyst team is betting that these two EDA giants will be the strongest investment theme in the next wave of AI-related investment. Citigroup's main rationale for its bullish view on these two EDA software giants lies in the unprecedented global AI wave, the increasingly prominent role of chip companies in the electronic design automation software ecosystem within the field of artificial intelligence chips, and the growing adoption and penetration of advanced AI-assisted tools in the EDA software ecosystem. Major chip design customers are generally reporting faster design cycles and significantly higher efficiency than before.