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Nvidia shares rocket to record close after analyst who missed the hot trade buys in

Key Points
  • Shares of Nvidia surged Wednesday to a record close thanks to an upgrade from SunTrust Robinson Humphrey
  • The firm admits it's late to upgrade Nvidia, one of the hottest stocks of the year.
  • It changed its standing from a hold to a buy with a $177 price target.
NVIDIA President and CEO Jen-Hsun Huang
Robert Galbraith | Reuters

Shares of Nvidia jumped 4 percent to a record close on an upgrade from SunTrust Robinson Humphrey.

Here's the thing: SunTrust is playing catch-up with the rest of Wall Street, who have already upgraded Nvidia.

Nvidia's shares have more than tripled in the last 12 months, beating out the returns of any other company in the S&P 500. Early last month, Citi set a 12-month price target of $180 on Nvidia. That's a tad more bullish than SunTrust.

The stock posted a record close of $159.94 in early June before pulling back. Nvidia closed today up $6.63 to $162.51. The shares are still a few dollars short of their all-time intraday high of $168.50 touched last month.

SunTrust's William Stein admits he is a bit late to the call. "We've under-forecasted the growth potential in these markets," Stein said, referring to Nvidia's growth in datacenter, gaming and automotive.

Stein said SunTrust is modeling 82 percent annual datacenter growth through 2018 versus Street estimates of 61 percent. His firm matches Wall Street's estimates of 11 percent year-over-year growth through 2018 in gaming.

Stein said that datacenter growth can be "lumpy" and calls it out as one potential risk.

"A temporary slowdown in growth would not only hurt revenue & EPS but would likely damage the P/E multiple as well," Stein said. "A slow down in the PC gaming growth or increased competition in this market could also damage revenue, EPS, and the P/E multiple."

SunTrust previously had a hold on Nvidia at $124. With its move to a buy rating, SunTrust set a $177 price target.

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