US Supreme Court Allows Shareholder Lawsuit Against Nvidia to Proceed
The US Supreme Court has ruled against Nvidia’s appeal, allowing a shareholder lawsuit over alleged misrepresentation of cryptocurrency mining revenue to proceed. The lawsuit claims Nvidia misled investors by minimizing its dependence on crypto-related sales during significant revenue growth in 2017 and 2018, prior to the cryptocurrency market crash.
Shareholders assert that Nvidia’s CEO, Jensen Huang, misrepresented the extent to which the company’s record earnings were tied to GeForce GPUs used for crypto mining rather than gaming. Following the 2018 crypto market collapse, Nvidia revealed it had missed revenue targets, resulting in a stock drop of over 28% within two days. Huang referred to this financial decline as a "crypto hangover."
The Supreme Court's decision came after a November hearing where justices evaluated whether the case warranted their intervention. Nvidia contended that the lawsuit lacked sufficient details to advance to evidence collection, but the Court dismissed this argument. The case will now be heard in federal district court in Oakland, California. The shareholders’ attorney characterized this outcome as a “major victory for corporate accountability.”
Nvidia faced considerable challenges during the crypto crash but has since experienced a substantial recovery. This year, Nvidia’s stock has increased nearly 190%, driven by strong GPU demand for mining, gaming, and artificial intelligence applications. The latest GeForce 4000-series GPUs have surpassed competitors like AMD in profitability rankings and gained a larger market share.
Nvidia reported a 95% increase in Q3 revenue, reaching $35.1 billion, with its Data Center segment showing 111% year-over-year growth. The company has forecasted Q4 revenues of $37.5 billion. Earlier this year, Nvidia achieved a significant milestone by exceeding a $3 trillion market capitalization, setting a new benchmark in the tech industry.
While Nvidia remains influential in gaming and cryptocurrency, it is diversifying its focus. In July, the company announced plans to develop infrastructure for advanced humanoid robotics, aiming to mitigate reliance on volatile sectors like crypto mining. These initiatives position Nvidia as a leader in innovation despite ongoing legal challenges.