Nvidia stock rose Monday after investment bank Goldman Sachs added the artificial intelligence chipmaker to its "conviction list" of top stock picks.
In a note to clients, Goldman Sachs analyst Toshiya Hari reiterated his buy rating on Nvidia stock with a price target of 605.
On the stock market today, Nvidia stock jumped 3% to close at 447.82.
Nvidia stock hit a record high 502.66 on Aug. 24 before pulling back in the recent stock market correction.
Santa Clara, Calif.-based Nvidia is "the principal 'shovel supplier' in the AI 'gold rush,' " Hari said. Further, the company's graphics processing units, or GPUs, are highly sought after for running AI applications in data centers, he added.
Nvidia Has 'Competitive Moat'
Nvidia is likely "to maintain its status as the accelerated computing industry standard for the foreseeable future," Hari said. He also said that opinion is based on its "competitive moat and the urgency with which customers are developing and deploying increasingly complex AI models."
Demand for its GPUs in data centers should remain high for some time, Hari said. Also, Nvidia's supply of chips from its contract manufacturers is improving, he said.
"A strong and broadening demand profile in the data center, plus an improving supply backdrop should support sustained revenue growth through calendar year 2024," Hari said.
He added Wall Street is underestimating the potential gross profit margin uplift stemming from an improving product mix.
Nvidia Stock Is On Three IBD Lists
Meanwhile, Reuters reported Monday that European Union antitrust regulators have not opened a formal investigation into chips used for artificial intelligence. That report comes after the French competition authority raided Nvidia offices looking for evidence of alleged anticompetitive practices.
Nvidia stock is on three IBD stock lists: Leaderboard, Big Cap 20 and Tech Leaders.
Further, Nvidia ranks first out of 37 stocks in IBD's fabless chipmaker industry group, according to IBD Stock Checkup.
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