The former striker believes West Ham's shaky home form and Dimitri Payet's injury could end up costing them.
The Hammers have been on fire under Slaven Bilic, with a series of impressive wins against last season’s top four under their belts already to leave them sitting in sixth.
Defending champions Chelsea, however, have looked a shadow of the team that won the Premier League title last term and find themselves in 16th place, just three points off the relegation zone.
Nicholas, though, has backed Jose Mourinho’s men to finish above their London rivals, as he expects them to put together a run of results at some point.
"Chelsea will flex their muscles," he told Sky Sports.
"Yes, they are a lot of points behind but when they get going - as I expect them to do against Norwich this weekend - before you know it they'll win four or five on the bounce, including against Tottenham, and they'll be back in it."
And the former striker believes that West Ham’s home form could ultimately come back to haunt them in their hunt for a top-four place.
The Irons have been mightilyy impressive on the road this season but have been less solid at Upton Park, with some disappointing losses at home already.
They have also lost star man Dimitri Payet to a long-term injury and Nicholas believes both could end up hurting West Ham.
"I just feel that, as you can see already, somebody like Dimitri Payet being injured takes its toll on them," he added.
"It's been good and they've got plenty of good results in them but there's still an awkwardness at home and I can't see them still being in the top-four mix come the end of the season."