Nvidia, widely considered the poster child for artificial intelligence (AI), received a notable upgrade on Wednesday as D.A. Davidson shifted its rating on the stock to buy from neutral.
The investment firm’s analyst, Gil Luria, also raised his price target for the graphics processing unit (GPU) maker to $210 per share from $195, underscoring a growing conviction in the company’s prospects.
The upgrade comes as Nvidia shares have already advanced 32% year to date and were seen moving modestly higher in premarket trading after the call.
In the previous trading session, Nvidia rose over 3% after getting Chinese market access back and its continued dominance in the AI market.
Luria cited accelerating demand for AI compute as a central reason for the more bullish stance, noting that the trend could sustain Nvidia’s growth well into next year and beyond.
Analyst sees compute demand as central catalyst
In his note, Luria highlighted that the “overwhelming growth in demand for compute” was the most important factor supporting Nvidia’s investment case, outweighing various risks.
While concerns remain around competitive pressures, demand volatility in China, potential bottlenecks, and what he described as “exuberant expectations,” Luria emphasized that surging compute needs ultimately “supersede our list of concerns regarding NVDA.”
He added that his team’s increasingly optimistic view of AI adoption rests on the belief that AI will transform labor itself, rather than simply reshaping the IT tech stack.
According to this perspective, compute demand is likely to continue ramping up even before enterprise customers realize a return on investment from AI deployments.
This structural demand, he argued, positions Nvidia strongly regardless of which segments drive the growth.
The analyst further suggested that investors are likely to tolerate modest earnings or revenue misses, given the larger growth narrative.
“While we are not ready to endorse sell-side consensus, especially given uncertainty around China, we believe investors will look through small misses, as they have done the last couple of quarters,” he wrote.
Nvidia’s position in the AI trade versus peers
Luria also contrasted Nvidia’s prospects with Apple, noting that the latter appears to be lagging in the AI race.
While Apple may still serve as a defensive holding in uncertain market conditions, he argued that Nvidia offers a more compelling offensive play given its central role in powering AI compute. “Which will continue to keep NVDA at the heart of the AI trade,” he said.
The call from D.A. Davidson adds to the ongoing debate among investors about the sustainability of Nvidia’s extraordinary growth trajectory.
The company remains the dominant supplier of GPUs that underpin the infrastructure for training and deploying AI models, making it a critical player in one of the fastest-growing segments of the technology sector.
Despite challenges, the investment firm’s revised stance reflects confidence that demand for compute power will remain the overriding driver of Nvidia’s growth for at least the next two years.
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