There's little question that Nvidia (NVDA 6.18%) has become the standard bearer for the possibilities resulting from recent developments in artificial intelligence (AI). The company's cutting-edge processors are the gold standard for use with AI models, which has supercharged its stock and helped it surge more than 500% since the start of 2023.

One Wall Street analyst believes there's still much more stock price appreciation to come.

Nvidia is profiting from the AI gold rush

Analysts at Truist Financial raised their price target on Nvidia to $1,177 while maintaining a buy rating on the shares. That represents a potential gain of 33% over the next 12 months or so compared to the stock price when the market closed on Monday. The Truist analyst said investors are underestimating Nvidia's leading position in parallel computing and AI.

The analyst goes even further, calling Nvidia "the AI company," citing its ongoing investment and its "culture of innovation" as strategic advantages.

A strategic advantage for Nvidia

It's hard to find fault with the analysts' position. When Nvidia reported the results of its fiscal 2024 fourth quarter (ended Jan. 28), the company spent a record $2.46 billion on research and development (R&D), capping off a year in which the company spent $8.68 billion on R&D -- also a record.

Much has been made about the looming competition as rivals scramble to develop a better, faster, more robust AI processor. However, Nvidia has a long track record of staying ahead of the competition, and -- thanks to its ongoing heavy spending on R&D -- that's unlikely to change anytime soon.

Furthermore, Nvidia is currently selling for 74 times trailing 12-month earnings. Wall Street expects Nvidia to generate earnings per share (EPS) of $24.46 in 2025 and $29.82 by 2026. If the analyst's price target is accurate, that would shrink the company's price-to-earnings (P/E) ratio to 48 next year and 39 the year after, which suggests Nvidia stock is a bargain at its current price.

For those reasons and more, Nvidia stock is a buy.