You know that friend who’s been stubbornly insisting that your favorite restaurant is overrated, only to finally try it and admit they were wrong? Well, that’s basically what just happened with Nvidia and one of Wall Street’s biggest skeptics.
DA Davidson, who’s been about as enthusiastic about Nvidia as a cat is about bath time, just did a complete 180. They upgraded the stock from “neutral” to “buy” and bumped their price target from $195 to $210 per share. That’s an 18% upside from current levels, which is pretty sweet considering this is the same firm that was predicting a 48% crash just six months ago. Talk about character development.
So what changed their minds? It turns out watching companies throw money at AI like it’s going out of style has a way of making even the most hardened skeptics reconsider their position. Gil Luria, DA Davidson’s head of technology research, basically said their “increasingly optimistic view of AI compute demand” made them forget all their previous concerns about Nvidia. It’s like when you finally admit that yes, maybe pineapple does belong on pizza after all.
The backstory here is pretty entertaining. DA Davidson had been the party poopers warning that big tech companies (the “hyperscalers” in finance speak) would eventually stop their AI spending spree around 2026. They also kept asking the very reasonable question: “But what does AI actually DO that justifies all this money?”
Turns out, a lot. Over the past six months, AI adoption has gone from “interesting concept” to “holy cow, everyone’s using this stuff.” Companies aren’t just buying AI chips because they’re shiny – they’re actually finding ways to make money with them. Revolutionary, I know.
The hyperscalers (think Google, Microsoft, Amazon) are still spending like sailors on shore leave, and there’s no sign they’re slowing down. As Luria put it, “the overwhelming growth in demand for compute is the only thing that matters.” Sometimes the simplest explanation is the right one: when everyone wants your product and they’re willing to pay premium prices for it, your stock tends to do well.
Of course, DA Davidson isn’t completely throwing caution to the wind. They’re still keeping an eye on potential speed bumps like whether these massive AI investments will actually pay off, competition from other chip makers, and the very real possibility that we might run out of electricity to power all these data centers. There’s also the small matter of “exuberant expectations” – Wall Street’s polite way of saying “maybe everyone’s getting a little too excited here.”
But for now, even the former haters are believers. Nvidia is up 32% this year, and with most Wall Street analysts now rating it a “buy,” it seems like the AI party is far from over. Sometimes the best investment strategy is simply admitting when you’re wrong – and jumping on the bandwagon before it leaves without you.
The moral of the story? In the stock market, as in life, it pays to keep an open mind. Even if that mind was previously convinced that a $4 trillion company was overvalued.