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Why Is Nvidia (NVDA) Stock Gaining Today?

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Shares of Nvidia (NVDA - Free Report) briefly moved more than 4% higher in morning trading Friday, quickly touching an intraday high of $176.85 in the process. The scorching hot chipmaker’s latest pop comes after yet another bullish analyst report, this time with a focus on Nvidia’s artificial intelligence potential.

Today’s analyst note comes from Evercore’s C.J. Muse, who reiterated his “outperform” rating on NVDA. Muse also raised his price target for the stock to $250 from $180, which would represent a 48% premium to Thursday’s close.

“Our sense is management believes that investors still severely underestimates the impact of AI and the size of the potential market,” Muse wrote in a note to clients. “We are only at the cusp of AI's growth potential and NVIDIA is creating THE AI computing industry standard.”

The analyst also noted that Nvidia has spent more than $10 billion in research and development for its CUDA software programming platform, which helps build out AI software. Muse said that Nvidia has created an industry standard that “will be nearly impossible to replicate.”

Nvidia shares are now up more than 60% year-to-date and 170% over the past 52 weeks. The stock is also currently sporting a Zacks Rank #1 (Strong Buy). Based on current consensus estimates, full-year earnings are expected to come in 40% higher this year, although Muse believes Nvidia’s earnings growth story is only just beginning.

“We believe the tremendous growth opportunities led by AI in the Data Center and Automotive verticals supports a clear path to $10 in earnings power over the next 3-5 years,” the analyst said.

Last year, Nvidia posted earnings of $2.57 per share. The Zacks Consensus Estimate is currently calling for profits to reach $3.60 per share this year.

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