Graphics chip maker NVIDIA Corp. (NVDA) has more room to climb even if it's one of the best-performing stocks of this year and it has artificial intelligence to thank for more of a surge in the stock.

That’s according to Wall Street investment firm Jefferies, which reiterated its buy rating on shares Monday and lifted its price target to $230 from $180 a share. In a research report, Jefferies analyst Mark Lipacis said the company’s Volta chip is becoming popular for AI applications, which bodes well for the company and its stock. In fact, the analyst thinks the strength of demand for Volta will result in “upside surprises over the next 18-24 months," the analyst wrote in a research note to clients covered by CNBC. NVIDIA launched the Volta chip in May.

At $230 a share, Jefferies thinks the stock could gain an additional nearly 17%. So far this year it is up more than 88%. Recently NVIDIA was trading down 0.03% or $0.06 to $196.84 a share. As CNBC pointed out, the stock is way higher than the S&P 500, which as of Friday was up 20%. (See also: Bill Gates Responds to Musk's AI Concerns.)

Garnering Dominance

The way Lipacis sees it, the AI market is NVIDIA’s to lose, with the company likely to control 80% of the share over the long haul. He likened the chipmaker’s prospects in AI to Apple Inc. (AAPL) and Microsoft Corp. (MSFT) in the PC and smartphone markets. Both were able to garner dominant positions in those marketplaces that continues to today. The analyst thinks NVIDIA will have EPS of $4.12 for fiscal 2019, which is higher than the $4.00 a share Wall Street is looking for. Lipacis is the latest in a laundry list of Wall Street analysts that have been getting increasingly bullish on the graphics chip company and its stock. (See also: Goldman Gets Even More Bullish on NVIDIA.) 

Just last week  Mizuho USA hiked its price target to $220 a share from $180 a share owning to the strength of cryptocurrency and PC gaming. In a research note to clients, Mizuho analyst Vijay Rakesh said shares NVIDIA will continue to benefit from “strong underlying trends in cryptocurrency and gaming” that are ahead of even the company’s expectations.

“We believe NVDA continues to see strong GPU [graphics processing unit] trends in cryptocurrency and gaming. GPU pricing remains up post-launch (of its new graphics chip) given shortage and strong demand,” wrote the analyst. NVIDIA has been benefiting all year from a diversification strategy that finds itself playing in fast-growing markets including AI, cryptocurrency, the data center and self-driving vehicles.

 

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