Bank of America's research analyst, Vivek Arya, predicted a possible 11% pullback in Nvidia's stock after their earnings report which is set to be released on February 21. The stock currently stands at about $740 as of Friday afternoon. Despite the potential decline, Arya believes any pullback would be brief, and the stock could receive a boost from the upcoming GPU Tech Conference scheduled for mid-March.

Investors have high expectations for Nvidia's fourth-quarter earnings, with buy-side estimates standing 9% above the consensus at $21.7 billion. Arya warned that these optimistic estimates might make it challenging for Nvidia to surpass expectations, leaving the firm vulnerable to an 11% implied post-earnings move, as indicated by Bloomberg options.

Arya suggested that any failure to meet bullish estimates would likely stem from supply-side issues rather than shifts in demand or competition. He pointed out that the company's valuation remains strong at 35 times its price-to-earnings ratio, below its median, indicating that Wall Street is continuing to show interest in Nvidia.

Furthermore, Arya highlighted Nvidia's efforts in aligning with US mandates on restricting chip shipments to China. After these mandates were implemented in October, Nvidia redesigned some of its semiconductors with lower performance to comply with Chinese market regulations. China traditionally accounts for about a fifth of Nvidia's revenue.

Despite the potential for a pullback in stock value, prominent firms managed by billionaire investors like Ray Dalio, Paul Tudor Jones, and Stanley Druckenmiller have been increasing their exposure to Nvidia, underscoring the ongoing interest and confidence in the chipmaker.