A scorching rally in Nvidia's shares came to a halt as investors worried if the chip designer's quarterly results would justify its towering valuation. The stock fell 5.3% to $687.91, potentially marking the biggest percentage drop in over eight months. Nvidia's rise this year helped it become the third most valuable U.S. company, with a market capitalization of $1.79 trillion on Friday.

Analysts expect Nvidia to report quarterly results on Feb. 21, with earnings of $4.56 a share and revenue projected to rise to $20.378 billion from $6.05 billion a year earlier. The market is cautious, with Nvidia trading at 32 times its forward earnings estimates compared to the industry median of 25.4.

Investors are eager for Nvidia to deliver strong guidance to sustain its momentum, as the stock's eye-popping run has supported gains in the U.S. market. With options pricing a potential 11% swing in either direction following the results, shareholders await a blowout performance rather than just meeting or slightly beating expectations.

Other AI-focused stocks like Super Micro Computer and Arm Holdings saw declines of 11.6% and 7.3%, respectively, while Advanced Micro Devices was down nearly 6%, despite recording double-digit gains year-to-date. The market eagerly awaits Nvidia's quarterly report to see if the company can maintain its strong position in the tech industry.