Shares of chip designer Nvidia extended their rally after a Barron's article highlighted its newly launched mobile chips for tablets and smartphones and the growing importance of its graphics technology.

Santa Clara, Calif-based Nvidia's stock jumped 10.4 percent to $24.52 on Monday, bringing gains so far this year to 64 percent, on optimism about its dual-core Tegra mobile chips.

Nvidia's stock could reach $40 if the Tegra chips drive significant market share gains and the company's shares stick to their historical expected earnings multiples, Barron's said, citing an analyst's estimates.

At the Consumer Electronics Show in Las Vegas in early January, the Tegra chips appeared in several new tablets and smartphones running Google's Android operating system, giving the company a lead against competitors like Qualcomm and Texas Instruments .

The first generation of high-end (Android) tablets will all have Nvidia chips in there, Arnab Chanda, an analyst at Roth Capital, told Reuters.

Nvidia made its name designing high-end graphics chips for personal computers. But as competition increased with Intel expanding into its market, the company has pushed into mobile, combining central processors based on ARM Holdings architecture with Nvidia's own graphics technology.

Validating Nvidia's focus on graphics technology, chip giant Intel said earlier this month it would pay the company $1.5 billion to license its patents, settling a legal dispute.

Also this month, Nvidia said it is designing an ARM-based central processor for personal computers, directly challenging Intel in the chip giant's own main market.

(Reporting by Noel Randewich; Editing by Tim Dobbyn)

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