Despite its 140% rise so far this year, investors are still underestimating the value of Nvidia's (NASDAQ:NVDA) stock.

So says Bank of America analyst Vivek Arya. On Tuesday, Arya reiterated his buy rating on Nvidia's shares and boosted his price forecast from $600 to $650. Arya's new target price represents potential gains for investors of roughly 13%, compared to the stock's current price near $575.

A digital bull is climbing an upwardly sloping stock chart.

Analyst Vivek Arya sees plenty of upside for Nvidia's shareholders. Image source: Getty Images.

Arya is bullish on the market opportunity for Nvidia's next-generation gaming chips. The tech titan unveiled a new line of graphics cards on Tuesday that met with rave reviews from gamers and analysts alike.

Nvidia said its GeForce RTX 30 Series GPUs (graphics processing units) deliver the "greatest-ever generational leap" in the history of the product line, with 2-times the performance and 1.9-times the power efficiency of its previous generation chips. 

Arya noted that Nvidia's RTX 3080 and 3070 cards are priced $100 less than expected at $699 and $499, respectively, which should help to boost sales. At the same time, its top-of-the-line 3090 card is priced 25% more than the previous generation, which should help to strengthen the product's profit margins. 

Will Nvidia's stock rise to $650?

The chipmaker's new graphics cards are impressive. They come at a time when video game sales are growing briskly, as more people seek forms of entertainment they can enjoy at home during the coronavirus pandemic. In turn, global gaming sales are projected to increase by 9.3% to $159.3 billion in 2020, according to Newzoo. 

As a key supplier to this massive and steadily expanding industry, Nvidia's future is bright. It's likely only a matter of time before its stock reaches $650 per share -- and it could happen sooner than many investors currently expect.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.