Shares of Nvidia (NVDA) - Get NVIDIA Corporation Report jumped Monday after analysts at Jefferies offered an upbeat assessment of the chipmaker's business prospects and "dominant" position when it comes to exploiting opportunities created by the proliferation in artificial intelligence.
Nvidia's stock price rose 1.17% to $226.61 following the release of the research note by Jefferies, which was based on a call with Nvidia's vice president of investor relations, Simona Jankowski.
Known for its high-powered gaming graphics chips, Nvidia sees continued "strength in (its) data center business and gaming business," the analysts wrote.
The big drivers are NVDA's "training and inferencing solutions for conversational AI applications" and the "adoption of RTX GPUs by game titles," noted Jefferies analysts Mark Lipacis, Vedvati Shrotre, and Natalia Winkler.
Jefferies reiterated its buy rating on Nvidia stock, with a price target of $255, representing an upside of more than 12%.
"We continue to believe NVDA has created a moat with its platform and ecosystem, and expect it to remain the dominant beneficiary from AI proliferation," according to the analysts.
Nvidia is coming off 17% growth in its gaming business for the quarter ended in October, "driven by strength in desktops and notebooks," which, in turn, represent half of its gaming business, according to Jefferies.
Nvidia is also benefiting from the development over the past decade of a "robust ecosystem with GPU processors, CUDA software stack, and domain-specific application libraries," the analysts wrote. The chipmaker believes these capabilities are "positioning itself ahead of its competitors in the AI/Neural Networking markets," the Jefferies analysts noted.