Nvidia (NVDA) shares are rallying today after Bank of America reiterated its Buy rating on the chipmaker and raised its price target to $190 from $165. Not only that, five-star analyst Vivek Arya called the company a “generational opportunity” that could shape industries for years to come, thanks to its pivotal position in the AI ​​industry. In fact, Nvidia's products are essential for advanced computing in AI applications such as data centers and autonomous vehicles.

Additionally, Bank of America noted that demand for AI models is growing rapidly as new models from companies like Microsoft-backed OpenAI (MSFT) are now coming to market more frequently. Since each new model requires significantly more computing power, the demand for Nvidia's chips continues to increase. Adding to Arya's confidence is the fact that other key chip industry players have signaled strong AI demand.

Additionally, Nvidia's CEO Jensen Huang recently pointed out the high level of interest in the company's Blackwell AI chip, calling it “crazy.” As a result, Bank of America now estimates that Nvidia could generate around $200 billion in free cash flow over the next two years. It's worth noting that Arya has had an 81% success rate on NVDA stock so far, with an average return of 88.6% per valuation.

More than just a hardware company

Although Nvidia is known for its hardware products, the company is also expanding into the software space. In fact, the company unveiled its growing range of AI software platforms at its AI Summit in Washington, DC a few weeks ago. By expanding its product offering to include software, Nvidia aims to create a recurring revenue stream while retaining customers over the long term.

Is NVDA Stock a Buy?

As for Wall Street, analysts have a Strong Buy consensus rating for NVDA stock based on 39 Buys, three Holds, and zero Sells over the last three months, as shown in the chart below. After a 231% increase in the share price over the past year, NVDA's average price target of $153.86 per share implies an upside potential of more than 8%.

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