Nvidia stock going to $120? 1 Wall Street analyst thinks so.

It’s been a wild few weeks Nvidia (NVDA 6.53%). Shares of the artificial intelligence (AI) chip leader rose 5% in seemingly every session as investors scrambled to value the dominant maker of data center GPUs.

Shares of Nvidia have risen since the start of 2023 as its hardware fuels the generative artificial intelligence boom. Now there are legitimate questions about the strength of the economy, the potential influence of AI, and how fast Nvidia can grow.

Consequently, the stock fell 23% from Nasdaq Composite peaked a month ago. However, one analyst sees the sale as a buying opportunity.

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New Street Research calls Nvidia a buy

Last week, New Street Research upgraded its rating on Nvidia from neutral in response to the selloff. The research firm noted that the stock is down 26 percent from its June peak, underperforming peers that also compete in data center AI.

She sees the selloff as a buying opportunity and has given AI stock a $120 price target, implying a 15% upside potential.

Is Nvidia stock a buy?

Nvidia shares pulled back as the AI ​​rally became overheated, but there’s a good argument to be made that the stock is oversold. The brief scare over a potential economic downturn appears to have passed for now. Nvidia’s momentum remains strong, although the company may be experiencing a delay in its new Blackwell platform.

Latest update from Taiwan Semiconductor Corporationthe world’s largest chipmaker, showed July revenue was up 45 percent from a year ago and 24 percent from June, a sign that the final month of Nvidia’s second quarter was strong in semiconductor industry and for AI chips.

Nvidia will report second-quarter earnings at the end of the month and looks set to deliver another round of strong growth. After the recent pullback, the stock looks more reasonable at a forward price-to-earnings ratio of 40.

If market sentiment improves and Nvidia’s second-quarter numbers are strong, the stock could be significantly higher by the end of the month. Longer term, the stock should continue to outperform if it can retain its AI lead.