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It is not unusual to see volatility when it comes to earnings and revenues growing and contracting in many areas of the semiconductor and processing space in technology. There are big wins that are often followed by big losses around new products and technologies. So, it may not be as crazy as it sounds when you hear that a company like NVIDIA Corp. (NASDAQ: NVDA) could grow its earnings by 60% by the year 2018.

A report issued by Canaccord Genuity on Monday called for big upside in NVIDIA ahead. The firm believes that the graphics processing unit growth has a multiyear run, and the parallel GPU computing segment is moving into other markets. As such, NVIDIA was raised to Buy from Hold.

Canaccord Genuity’s Matthew Ramsay and Steven Lee were the analysts behind that call. They raised their price target to $35.00 from $30.00, up for a total return of about 19% if you use the $29.80 prior close and the dividend yield of almost 1.5%.

In the Canaccord Genuity report, Ramsay said:

Overall, we maintain our belief NVIDIA’s transformation from a PC-leveraged GPU supplier to a diverse visual-computing company is nearing completion with growth and overall earnings power now driven by the company’s four target growth markets of gaming, enterprise, HPC/cloud, and automotive now representing over 85% of revenue.

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The report further talked up NVIDIA transforming itself. Ramsay’s note said:

While we have applauded and appreciated the company’s transformation, our prior rating and price target have underestimated the strength of key themes driving NVIDIA’s strong recent results including augmented/ virtual reality, eSports, and automotive display/control, as well as the company’s position within these markets. After a re-evaluation of our thesis and meetings with key executives last week, we believe NVIDIA deserves its recently achieved premium valuation and believe upside remains to consensus estimates driven by multi-sector growth and deep technology moats.

The real issue here is now they get to over 60% earnings growth in the next couple of years. Canaccord’s earnings estimates are above consensus but they are for fiscal year 2018. Secular growth businesses were said to now be driving the bus. They had 44% growth in GeForce gaming revenue driven by strength of Maxwell GPUs and eSports. There was also record revenues tied to automotive with 51% growth. Another win was from NVIDIA growing a traction of deep learning applications across several enterprise verticals.

Ramsay’s take is that the recent valuation expansion is sustainable for NVIDIA. His fiscal 2018 estimates were introduced as $5.32 billion for revenues and $1.74 in earnings per share. NVIDIA is also in a somewhat protected position with a large growth opportunity for a larger total addressable market.

NVIDIA’s current expectation is that the fiscal year 2016 (January 2016) is now $1.06 EPS and the fiscal 2017 estimate is $1.35 EPS. If the company can really attain operating earnings of $1.74 per share in two years, that will generate more than 60%.

Canaccord Genuity’s $35.00 price target is based on 20 times the fiscal 2018 operating EPS estimate. NVIDIA shares were up 1.35 at $30.18 on Monday afternoon, versus a 52-week trading range of $18.94 to $31.94.

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