Nvidia Corp. (NASDAQ:NVDA) faces heightened scrutiny ahead of its earnings as technical challenges with its latest artificial intelligence chips and broader market pressures raise concerns, according to Mizuho analyst Jordan Klein.

What Happened: Klein, a longtime Nvidia bull, warned investors that the semiconductor giant's shares are "modestly at risk" following reports of overheating issues in its new Blackwell systems, reported Investing.com.

The timing is particularly sensitive given Nvidia's recent ascent to become the world's most valuable company, with a market capitalization of $3.482 trillion.

"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," Klein noted in his investor communication, highlighting the volatile nature of current market dynamics.

Why It Matters: The Blackwell chips, unveiled in March and promising 30 times faster performance than previous generations, have reportedly encountered thermal issues when installed in high-density server racks.

Major customers potentially affected include Meta Platforms Inc. (NASDAQ:META), Microsoft Corp. (NASDAQ:MSFT), and Alphabet Inc. (NASDAQ:GOOGL) (NASDAQ:GOOGL) subsidiary Google.

Nvidia has responded to the situation, with a spokesperson telling Reuters that "engineering iterations are normal and expected" while working with cloud service providers.

Despite these immediate challenges, Klein maintains his long-term optimistic outlook for Nvidia but cautions about near-term volatility, particularly from retail and momentum-driven investors who "purely react to headlines and initial stock moves."

However, CNBC's Jim Cramer offered a contrasting view, suggesting the market's reaction might be overdone. "Be skeptical about the negatives with Nvidia," Cramer posted on X. He later expanded on CNBC, saying, "I'm more inclined to think you're getting a buying opportunity in Nvidia thanks to The Information publishing a story that may simply not be that."

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.