AI powerhouse Nvidia reported quarterly earnings Wednesday that beat expectations, but shares slipped amid concerns about an AI chip spending bubble and the company's stalled business in China.

The California-based firm posted profit of $26.4 billion on record revenue of $46.7 billion in the recently ended quarter, driven by intense demand for chips from major tech companies powering AI datacenter computing.

While overall revenue significantly increased year-over-year, money taken in from Nvidia's Data Center compute products like its coveted graphics processing units (GPUs) declined 1 percent from the previous quarter.

The drop was driven by a $4 billion decrease in sales of H20 chips—specialized processors the company designed for the Chinese market, according to the earnings report.

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