Nvidia's secret weapon just led to an upgrade from Wall Street (NVDA)

NVIDIA employees

Nvidia has been on an upward tear all year, and Wall Street is just now figuring out why.

The company is well known by PC gamers for its graphics processing units, and Nvidia has gained a recent foothold in the data center and driverless-car sectors. But these are just symptoms of Nvidia's biggest weapon: a company culture of innovation.

That's according to a note to clients from SunTrust Robert Humphrey, who upgraded Nvidia to a Buy and raised the price target on the stock to $177, 12% higher than the current share price.

"We believe there are still aspects of the company, specifically related to its role in AI, that are under-appreciated by the Street," William Stein, an analyst at SunTrust, wrote. "Nvidia has a strong culture of innovation and desire to drive general purpose graphics processing unit (GP-GPU) computing adoption."

The company has produced graphics processing units, GPUs, for the PC gaming community since the 90s but general purpose GPUs that the artificial community has started to use are a more recent technology. Nvidia first started focusing on the technology in the early 2000s.

Nvidia's CUDA computing platform was first released in 2006 and it allows programmers to take advantage of the "parallel" processing power of the company's GPUs to better expand their usefulness beyond processing video game graphics.

The CUDA software is one specific innovation Stein says gives Nvidia a huge competitive edge because it is harder to replicate than the company's hardware technology.

Nvidia also sponsors lots of academic research. The company has partnered with a large number of car and tech company data teams to aid them in their pursuit of autonomous vehicles. It also sponsors research on deep learnings and artificial intelligence, which is often run using the company's hardware and software.

This endless pursuit of innovation has led Nvidia to be crowned as the smartest company in the world by MIT, and Stein says it's more important than any single chip or technology the company produces today.

It's why, even though investors love Nvidia, Stein thinks there is more room for the stock to grow. He calls the culture of innovation at Nvidia a "deep and wide" moat that separates it's from traditional and startup competitors.

Investors have so far rewarded Nvidia for the innovations that come as a result of the company culture. Shares have increased 54.05% this year. Nvidia is currently trading at $157.01 and increased 2.18% on Wednesday after the upgrade by SunTrust.