SAN FRANCISCO, Aug 27 — AI powerhouse Nvidia reported quarterly earnings that beat expectations, but its shares slipped on investor concerns over a possible AI chip spending bubble and stalled business in China.

The California-based firm posted a profit of US$26.4 billion (RM111.6 billion) on record revenue of US$46.7 billion for the quarter, driven by strong demand for chips powering AI datacentres.

However, revenue from Nvidia’s data centre compute products, including its high-demand GPUs, declined 1 per cent from the previous quarter due to a US$4 billion drop in sales of its H20 processors designed for China.

For the current quarter, Nvidia projected US$54 billion in revenue, but said its forecast assumes no H20 sales.

“The data centre results, while massive, showed hints that hyperscaler spending could tighten at the margins if near-term returns from AI applications remain difficult to quantify,” said Emarketer analyst Jacob Bourne. “At the same time, US export restrictions are fueling domestic chipmaking in China.”

Nvidia shares fell more than 3 per cent in after-market trading.

Earlier this month, President Donald Trump confirmed Nvidia would pay the US 15 per cent of revenues from certain AI chip sales to China, while dismissing its H20 chips as “obsolete.” Beijing has since urged Chinese firms to rely on domestic semiconductor suppliers.

“There is interest in our H20s; we have supply ready to ship,” Nvidia chief executive Jensen Huang said, adding the China market could represent a US$50 billion opportunity this year. He said the company was still waiting on geopolitical developments before shipments could move forward.

Huang also stressed the importance of US firms remaining competitive in China: “We just have to keep advocating the sensibility of, and the importance of, American tech companies to be able to lead and win the AI race and help make the American tech stack the global standard.”

Despite concerns of an AI bubble, Nvidia remains a bellwether for the sector and last July became the first company to hit a US$4 trillion market value. Huang noted that top cloud providers are set to spend about US$600 billion on AI infrastructure this year, with Nvidia well placed to capture a significant share. — AFP