Nvidia Corporation (NVDA) - Get Report shares hit a record high Friday following a bullish note from Bank of America Merrill Lynch which raised its price target on the graphics chipmaker to $275 a share.

BAML said Nvidia's strength in the gaming space, as well as its dominance in artificial intelligence and virtual reality technologies as well as its recent tie ups in the autonomous vehicle industry justify its forward price/earnings valuations and point to further upside gains. 

"The stock is owned by only 26% of large-cap fund managers in the US, which continues to support the argument for expanding ownership," BAML wrote in a note published Friday. 

Nvidia shares traded as high as $229.71 each in early New York trading before paring gains to around 1.81% higher from last night's close to change hands at $228.50 a move that extended their three-month gain to around 16%.

Nvidia was also the best-performing chip stock in the U.S market last year, following an S&P 500-leading gain of 223.85%.

Earlier this month, Nvidia added Volkswagen AG (VLKAY) and Uber Technologies Inc. to its growing list of carmaking partnerships keen on using its artificial intelligence technology.

Nvidia announced the new tie-ups at the Consumer Electronics Show in Las Vegas, building on previous partnerships with Tesla Inc. (TSLA) - Get Report and China's Baidu Inc. (BIDU) - Get Report . Volkswagen, the world's No. 2 carmaker, said Nvidia was the world leader in AI technology that is "revolutionizing" the industry.

Analysts at Goldman Sachs also reiterated their "buy" rating on the Santa Clara, Calif.-based group in early January and maintained its $228 price target, a move TheStreet contributor Jonas Elmerraji said reflects the fact that Nividia is "positioned to hand investors big returns for yet another calendar year."

"Without a doubt, Nvidia is enjoying some tailwinds across multiple product lines right now," Elmerraji said. "The firm's GPUs, historically used for accelerating video game graphics, are being used in a variety of hot applications right now, including cryptocurrency mining, machine learning, and augmented and virtual reality."

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