Nvidia's latest earnings report appears strong, but investors remain wary about a potential AI bubble burst. Nathan Bomey, a business reporter for Axios, joins CBS News with more.

Nvidia reported second quarter earnings that exceeded overall expectations, generating $46.7 billion in revenue. However, its data center revenue, a key segment for the company, reached $41.1 billion, just under the $41.3 billion anticipated by analysts. Nvidia's stock saw a slight dip after the report, as investors remain cautious about the potential for an AI market bubble.

Trade tensions between the US and China have significantly impacted Nvidia's ability to sell certain AI chips to China, eliminating a potentially lucrative revenue stream. The company's CEO, Jensen Wang, has emphasized the importance of the Chinese market for US AI firms, while broader debates continue over national security and economic interests. Data center revenue now accounts for nearly 90% of Nvidia's business, underscoring its central role in powering AI infrastructure for major technology companies.

Nvidia beats earnings expectations but AI bubble concerns remain

Welcome back and video beat expectations in its second quarter earnings report But came in slightly underestimates for its data center revenue Let's show you the numbers the chip maker brought in forty six point seven billion dollars in q2 Its data center revenue was forty one point one billion just shy of the forty one point three forecast from analysts Axios business reporter Nathan Bomi joins me now with what this really means. He's joining us from Arlington a think of morning So did Nvidia do enough to impress Wall Street? Those numbers are staggering. I think no matter how you slice it Yeah, staggering numbers, but you know Wall Street has become used to staggering numbers from Nvidia It feels like every quarter they end up exceeding expectations in this quarter You know, the numbers were very solid, but I didn't necessarily knock the socks off of investors So you did see Nvidia stock back up just a little bit after hours yesterday Because investors are still looking to see is this an AI bubble and if it is that could pose issues for Nvidia They insisted on the call. They're still seeing strong demand however now viewers should be aware that Nvidia makes a lot of the hardware and some I believe the software behind a lot of Artificial intelligence systems in many ways. It's the backbone of AI for many big companies But how a trade tensions between the US and China influencing the company and complicating the picture yeah, this is becoming a pretty significant issue because China is obviously a massive market for AI infrastructure and the tension between the Trump administration and Xi Jinping's administration and China has led to Basically a complete shutdown in sales of this h2o AI chip to China This is the chip that the US is licensed to be able to sell China now Because they made a deal with the Trump administration to be able to give them 15% of the sales very unusual deal But China basically has said at this point they're not interested in those chips They don't want their companies to buy them because they're upset about maybe the security or upset about the fact that this isn't the top AI chip that Nvidia sells and so at this point if it is not selling any of those To China and they want to continue to they want to resume about but at this point there's no revenue there So they've said if they're able to continue to do that It could see another three to five billion dollars in revenue in the next quarter And so what does this signal for America's position in the race for AI? Dominance because as we speak with experts, they always say it's like a race between the US and China It's unclear who's ahead or what really would count as proving that either side is ahead. How do you see it? Well, Jensen Wang, of course the CEO of Nvidia who some people have called the godfather of AI He says that the Chinese market is so lucrative that the American AI companies can simply not afford To not be involved in that market He says it could be a 50 billion dollar market and says that AI sales to China will only help the US economy So, of course the alternative perspective is that there's a major national security risk there and we don't want to boost Chinese technology, which could have enabled their them. I'm in a military capacity. So it's it's a debate that's ongoing But from an economic perspective, we know where the American company stand and in our last few seconds with you Just help our viewers understand why the data center revenue from Nvidia matters so much and is such a crucial part of this puzzle Yeah This is bordering on 90% of the company's revenue at this point because this is the this is the infrastructure that companies like Microsoft and Amazon are Investing so heavily in because it's the infrastructure that runs things like chat GPT and all these AI bots and all this AI Software essentially that is powering this new economy. So these companies are need these these chips in Heaps, and so if they can't get them from Nvidia, they'd have to get them from someone else. All right interesting stuff New world we're exploring here Nathan Bomi. We appreciate your time

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