After missing the big run-up in Nvidia stock this year, investment bank Morgan Stanley turned positive on the graphics-chip maker on Friday.
Morgan Stanley analyst Joseph Moore upgraded Nvidia stock to overweight, or buy, from equal weight, or neutral. He also raised his price target to 304 from 255.
On the stock market today, Nvidia stock rose 0.7% to close at 257.25. Year to date, through Thursday's close, Nvidia had surged 74.8%.
Enthusiasm over artificial intelligence and large language models is "turning into stronger spending both near term and long term" that will benefit Nvidia, Moore said in a note to clients.
"We have been too data point-oriented around a positive bigger picture, but the narrative is too strong to remain on sidelines," he said.
Nvidia Stock In Top 2% Of Stocks
Nvidia's sales and earnings have been pressured for the last three quarters by weak gaming device sales and slowing data center business. But generative AI, such as ChatGPT, is becoming a megatrend that can't be ignored, Moore said.
Artificial intelligence is "one of the most significant developments in technology since the development of mobile internet," Moore said. Cloud computing services will be vying for leadership in the AI space over the next three to five years, he said.
"We are seeing a significant shift in cloud spending towards AI (and in our view towards Nvidia), even as budgets are under pressure," he said.
Nvidia stock has an IBD Composite Rating of 98 out of 99, according to IBD Stock Checkup. That puts it in the top 2% of stocks for performance in key fundamental and technical measures over the past 12 months.
IBD's Composite Rating is a blend of key fundamental and technical metrics to help investors gauge a stock's strengths. The best growth stocks have a Composite Rating of 90 or better.
Also, Nvidia stock is on IBD's Leaderboard list.
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