Shares of graphics chipmaker Nvidia ( NVDA) popped today after a Wall Street analyst raised his recommendation to a buy rating from a sell. The stock tacked on $1.87, or 7.7%, to $26.08 in recent trading.

UBS Warburg analyst Alex Gauna said he's gone more positive on the shares in the wake of Sony's ( SNE) recent announcement of its upcoming game machine PSX and portable game console PSP.

Sony's new products, which combine a slew of multimedia capabilities, signal a potentially broadening of the market for graphics chips such as those sold by Nvidia.

To be sure, Nvidia currently draws around 20% of its sales from Sony rival Microsoft ( MSFT), which uses the silicon in its Xbox machines. Microsoft and other vendors haven't yet outlined any competitive response to the new Sony products. But Gauna thinks it's reasonable to expect they might do so, given falling prices and improving technology in color displays and storage technology.

Though Sony makes its own chips, Microsoft doesn't; this means Nvidia could potentially benefit if the software giant decides to roll out a competing device.

"Although in the short term PSP and PSX sales could adversely impact Nvidia Xbox exposure, we believe this risk is exceeded by the longer-term upside potential in these new product categories and we are raising our secular growth expectation to 20% from 10%," he writes in a note. UBS Warburg hasn't done recent banking for Nvidia.

Rival graphics chipmaker ATI Techonologies ( ATYT) jumped too, rising 99 cents or 13.7% to $8.19. Analyst Steve Allen at Sterling raised his price target from $7.50 to $9.50 today, following the announcement of ATI's recent design wins with three of the top five motherboard manufacturers in Taiwan, which have decided to adopt its integrated graphics chipset. That's an impressive win, given that ATI's silicon will displace Intel's. Sterling has not done banking for ATI.