Nvidia faces shareholder lawsuit over crypto revenue

The Supreme Court allows a shareholder lawsuit against Nvidia, claiming it misled investors about crypto revenue before the 2018 market crash.

The US Supreme Court has ruled against Nvidia’s appeal, allowing a shareholder lawsuit over alleged misrepresentation of cryptocurrency mining revenue to move forward. The lawsuit accuses Nvidia of misleading investors by downplaying its reliance on crypto-related sales during its rapid revenue growth in 2017 and 2018, a period before the cryptocurrency market crashed.

Shareholders allege that Nvidia’s CEO, Jensen Huang, misrepresented how much the company’s record-breaking earnings relied on its GeForce GPUs being used for crypto mining instead of gaming. After the 2018 crypto market collapse, Nvidia disclosed that it missed revenue targets, causing its stock to drop over 28% in two days. Huang referred to this financial setback as a "crypto hangover."

The Supreme Court’s decision follows a November hearing where justices examined whether the case warranted their intervention. Nvidia had argued that the lawsuit lacked the necessary details to proceed to the evidence-collection phase, but the Court rejected this claim. The case will now be heard in a federal district court in Oakland, California. The shareholders’ attorney described this development as a “major victory for corporate accountability.”

Nvidia faced significant challenges during the crypto crash, but the company has since experienced a remarkable recovery. This year, Nvidia’s stock has surged nearly 190%, driven by strong GPU demand for mining, gaming, and artificial intelligence applications. The company’s latest GeForce 4000-series GPUs have outperformed competitors like AMD in profitability rankings and have captured a larger share of the market.

Nvidia recently announced a 95% increase in revenue for Q3, reaching $35.1 billion, with its Data Center segment showing 111% year-over-year growth. The company has also forecasted Q4 revenues of $37.5 billion. Earlier this year, Nvidia achieved a significant milestone by surpassing a $3 trillion market capitalization, setting a new benchmark in the tech industry.

While Nvidia remains a major player in gaming and cryptocurrency, it is diversifying its focus. In July, the company announced plans to build infrastructure for advanced humanoid robotics, aiming to reduce its reliance on volatile sectors like crypto mining. These efforts have positioned Nvidia as a leader in innovation despite ongoing legal battles.