Shares of global chip giant Nvidia have soared in the past year, driven by the AI boom。Nvidia has also become the first choice for many analysts' portfolios, including Bank of America research analyst Vivek Arya.。But recently, Arya warned that the stock could see a sharp correction。

Arya believes this undercuts Nvidia's potential to exceed expectations, leaving the company vulnerable to about 11% of implied post-earnings volatility.。As of Monday's close, the stock was trading at 726.13美元。

Arya wrote in the report that while the decline in Nvidia's share price may be larger, it will also be short-lived.。Arya believes that if Nvidia fails to meet optimistic expectations, it may be due to supply-side factors rather than changes in demand and competition.。That is, this correction is driven by excessive bullishness rather than fundamentals。

In a separate report, Arya expects Nvidia to maintain 90 percent of the AI training market and more than 50 percent of the AI inference market.。

Arya further said that this short-term share price volatility should be addressed after Nvidia's GPU Technology Conference in mid-March.。Arya said, "For reference, Nvidia shares have risen an average of 6% in the T + 1 day following the past six annual GTC activities (while the S & P 500 has risen 1%).。"

As for predicting a correction in Nvidia's share price, Arya wrote in the report: "We believe that one explanation for Nvidia's move is a mix of fear and greed, and investors' indiscriminate pursuit of all things artificial intelligence.。We acknowledge these factors, but believe this understates the company's solid execution and earnings per share revision。"

In addition, Arya also mentioned the impact of Nvidia's compliance with U.S. restrictions on chip exports, especially in the Chinese market.。In order to comply with the new U.S. chip export regulations, Nvidia has redesigned some lower-performance chips specifically for the Chinese market, but these chips have been cold in China and challenged by local Chinese chip makers.。It's also a potential downside for Nvidia。Because over the years, the Chinese market can account for about a fifth of Nvidia's total revenue.。

Whether or not Nvidia's share price actually falls as Arya predicts, Wall Street's love for Nvidia is evident。Institutions run by several billionaire investors have been ramping up their investments in Nvidia, including companies run by Ray Dalio, Paul Tudor Jones and Stanley Druckenmiller.。

This year, Nvidia has continued last year's rally and the stock has risen 51% since 2024.。Last week, the company overtook Alphabet, parent of Amazon and Google, to become the third-largest company in the S & P 500 by market capitalization, behind Microsoft and Apple.。