The 33-year-old shares the lead after the first round of the 2013 Masters just 12 months after he told the Spanish media that he didn't feel he was cut out to win a major championship.
Nicklaus, who has a record 18 major titles to his name, said he found those comments "strange" because he says the Spaniard still has plenty of time to make a name for himself in his career.
But he says Garcia, who has finished in the top five in all four majors, needs to break down the psychological barriers by winning one as soon as possible.
"He's a very talented young man and he's still a young man," Nicklaus told Sky Sports. "I think Sergio's a good player, but he doesn't seem to have the confidence to finish four days.
"He's been there and been very close. He's played well enough to win, but just hasn't received that trophy at the end of the tournament. That pretty soon gets into your head and when it gets to your head it makes it more difficult.
"I firmly believe that even in his early thirties if, let's say, he just so happened to win here I think Sergio is a good enough player to win several more. If he doesn't ever get the first one, it makes for a tough career."
Many of Thursday's headlines were taken away from Garcia by the performance of 14-year-old Chinese player Tianlang Guan.
The youngest golfer to ever play at The Masters carded an astonishing one-over-par 73 just a day after he and his family had sat down with Nicklaus to discuss his future.
But the American golfing legend encouraged him to focus on education rather than putting too much pressure on his golf career for the time being.
"We met on Wednesday morning and I spent about an hour with him and his mother and father," Nicklaus explained. "Really, they talked more about education and how he can play golf.
"In China, he lives in Guangzhou and he goes to school at five-to-six in the afternoon. There really isn't any time after that to play golf because the nearest golf course is 40 minutes away.
"I said listen, if you want to play golf I wouldn't worry about the next three or four years. Finish your education, at least your high school, and if you want to play golf then come to America and play college golf or whatever you want to do.
"Take the progression properly, don't push yourself. Enjoy this week and learn what's going on. Learn how to play the golf course and have fun with it. More important is really figuring out what he's going to do in the future.
"We talked about a combination of going to school there - because he likes going to school there - and home schooling as he travels. He's going to travel and play, so he's got to have that combination.
"I kept stressing his education because you never know where you're going to end up. His father's a doctor and his mother's an engineer so they're very well educated and they're smart people.
"They understand an education and how important it is."
Nicklaus was the special guest for the first hour of Sky Sports' coverage of the 2013 Masters on Thursday - and shared a few fascinating hints on how to conquer Augusta - as he has six times in his glorious career.
"There's keys for me at Augusta that you need to do," he said.
"One is I can't believe there's any time on this golf course where you hit the golf ball on the centre of the green and you're going to get in trouble. I don't care what green you're on, you've always got a good putt and it's never a difficult putt
"The second thing is there's about half a dozen shots on this golf course that you've really got to look out for and if you can identify those six shots in your mind - like on the second hole there's an airline ticket booth down there if you hook it off to the left! You can get your ticket home!
"That's the only shot on the front nine that you really have to worry about. On the back nine you've got the second shot at 11, the tee shot at 12, the second shot and tee shot at 13 and the second shot at 15.
"I don't think you worry too much about 16. I've played here 45 times and never hit the ball in the water at 16. I don't think too many people do, so I don't worry too much about that one.
"There's about half a dozen shots if you're under pressure. If you're playing the second shot at 11 do you want to pressure the shot into the pin? No.
"Use your head and hit it to the right side of the green and it gives you another day to play. You're going to get a lot of fours from there and you're going to make many fives and move on.
"If you're standing back on 15 at 260 yards, you may think you can get there but what do you think your odds are? Fifty-fifty maybe? Why would you do that and put yourself out of the tournament because you're going to make six, seven or eight if you don't do it?
"That's the way I play this golf course. It's just common sense. Most people don't think about it. When they come here for the first time they're so enthralled with Augusta and the length of it.
"They think it's a big-hitters golf course, but it's not a big-hitters golf course if you use your head."