Biggest Nvidia bull on Wall Street warns shares are 'modestly at risk'

Investing.com -- Nvidia, the darling of the semiconductor sector and a key player in the tech rally, faces mounting challenges ahead of its highly anticipated earnings report, according to Mizuho (NYSE:MFG ) analyst Jordan Klein.

In a note to investors, Klein, a prominent Nvidia (NASDAQ:NVDA ) bull, cautioned that the company's shares are "modestly at risk" due to heightened market pressures and investor behavior.

Klein pointed to a combination of sector-wide weakness and specific concerns about Nvidia's latest Blackwell systems, which have reportedly encountered overheating issues.

"Futures indicated higher this morning, but the negative news out on overheating issues in Nvidia's new Blackwell systems has me incrementally worried about Semis," Klein noted.

He expressed doubts that early gains in tech stocks could hold, citing broader market dynamics: "There is just so much quant, passive and fast momentum money swirling around in markets these days and I assume that style sells first, asks questions later."

The semiconductor sector has already been under pressure, with Applied Materials (NASDAQ:AMAT )' disappointing guidance last week amplifying concerns.

"Friday's trading action was just a terrible sign for the Tech sector," said Klein. He noted that investor sentiment has shifted to looking for "any and every reason to sell," with semiconductor stocks being particularly vulnerable.

Klein emphasized the heightened stakes for Nvidia's upcoming earnings, given the company's status as the most-followed stock in the market.

"A terrible reaction to a mixed print and guide from semi cap AMAT puts even more focus and pressure on Nvidia to halt the decline with a strong enough beat and guide," he explained.

He also warned that Nvidia's current valuation sets a higher bar than in previous quarters.

While Klein remains optimistic about Nvidia's long-term prospects, he highlighted the risks of immediate downside pressure, especially from retail and momentum-driven investors who "purely react to headlines and initial stock moves."

Source: Investing.com