Over the past several years, NVIDIA (NVDA 4.76%) has taken investors on a wild ride. The company had an epic run beginning in early 2016, generating gains of over 750% by late 2019.

What caused this gold rush? The company's graphics processing units (GPUs) hit a trifecta of growth catalysts, including adoption of artificial intelligence (AI) and data centers, use in cryptocurrency mining, and being the processor of choice among avid gamers -- all of which drove demand through the roof.

That growth came to a screeching halt when the cryptocurrency bubble burst, leaving the market flooded with GPUs, just as data center growth hit a slowdown, sending NVIDIA stock tumbling, losing more than half its value.

Growth resumed last quarter, returning the company to its former glory. Now, one of the few remaining bearish holdouts has joined the bullish camp, sending NVIDIA to new heights.

NVIDIA GeForce RTX 2080 Ti processor.

NVIDIA GeForce RTX 2080 Ti processor. Image source: NVIDIA.

A bear turns bullish

Bernstein analyst Stacy Rasgon upgraded NVIDIA from market perform (hold) to outperform (buy), while raising his price target from $300 to $360, suggesting that even after its recent gains, the stock still has more than 21% upside from Tuesday's closing price.

Kudos to the analyst, who issued a rare mea culpa with the upgrade, saying that not making the bullish call sooner "was an error." Rasgon went on to say "the current situation seems much more stable with a "clean" (no crypto) gaming profile, improved Turing [chip] traction, and a return to hyperscale [cloud computing] builds; had these been true 16 months ago, we suspect the stock would have continued rising," Rasgon said. 

There are several catalysts that could keep NVIDIA moving even higher in the coming months. These include the increasing adoption of NVIDIA's Turing chips, a resumption in spending by cloud computing and data centers providers, and the company's next-generation GPUs (code-named Aphere), which could all boost the stock even further.

The recent results were compelling

There was a lot to like in NVIDIA's fiscal 2020 fourth quarter results. Revenue grew to $3.1 billion, up 40% year over year, marking the company's best growth rate in nearly two years, though this was partially the result of easier comparisons. More importantly, it also ended the company's streak of four consecutive quarters of year-over-year sales and profit declines.

Gaming chips led the charge, growing to $1.49 billion, up 56% year over year and making up nearly half of the company's sales. Data center revenue, which also includes processors used for AI, had record sales of $968 million, up 43% compared to the prior-year quarter.

The professional visualization and original equipment manufacturer (OEM) segments grew 13% and 31%, respectively, while the auto segment was flat.

Back from the brink

Short-sighted investors headed for the exits at the first sign of trouble for NVIDIA, but those that got greedy with this growth stock have been amply rewarded: NVIDIA has more than doubled over the past year.

Some might argue that investors should clear of NVIDIA due to its recent run and its lofty valuation, selling for 70 times calendar 2019 earnings, but a more reasonable 40 times forward earnings.

However, with the specter of cryptocurrency in the rearview mirror, data centers resuming their spending, and the gaming segment as strong as ever, NVIDIA is back on a firm foundation.

If the company's AI or self-driving car businesses really take off, the stock price will likely follow suit, making today's price seem like an absolute bargain.