The shares of Nvidia (NVDA) are gaining ground after research firm Pacific Crest upgraded the stock to Sector Weight from Underweight, its equivalent of a sell rating. The company's gaming business should be boosted by strong demand for cryptocurrency mining tools, the firm stated.

STRONG CRYTOCURRENCY DEMAND: After conducting supply chain checks in Asia, Pacific Crest analyst Michael McConnell believes that strong demand for Nvidia's graphic processing units for use in cryptocurrency mining "has rapidly depleted" the inventory in Nvidia's channels. As a result, the analyst is less worried about the growth of the company's gaming business for the rest of fiscal 2018. In the wake of the firm's checks, McConnell is also less concerned about the record days of inventory and "elevated" days of sale outstanding that he says the company is facing.

BEARISH NOTE: On June 15, Wells Fargo issued a bearish note on Nvidia. According to the firm, Nvidia's accelerators "are optimized for some specific types of applications" i.e. graphics or image processing, leaving the door open for processors that are stronger in other areas. Wells expects several different classes of datacenter accelerators to eventually emerge, creating more competition for Nvidia. The firm kept an Underperform rating on the stock.

PRICE ACTION: In morning trading, Nvidia rose 1.5% to $159.65. Year-to-date, the stock is up nearly 50%.