Nvidia Faces Shareholder Lawsuit Over Crypto Revenue
- Nvidia faces litigation over mining revenue.
- Nvidia shares rise after market rally.
- Company seeks to diversify beyond cryptocurrencies.
Tech giant Nvidia now faces a significant legal challenge. The U.S. Supreme Court has denied Nvidia’s appeal, paving the way for a shareholder lawsuit to proceed, accusing the company of misrepresenting its revenues from cryptocurrency mining. The lawsuit highlights a tumultuous period in 2017 and 2018 when the company experienced explosive growth followed by a sharp decline in the cryptocurrency market.
Shareholders have pointed out that Nvidia CEO Jensen Huang misrepresented the company’s reliance on its GeForce GPUs, which were traditionally geared toward gaming but were then widely used for cryptocurrency mining. This misrepresentation came to light after the cryptocurrency market crashed in 2018, sending Nvidia’s shares down more than 28% in just two days. Huang himself referred to the situation as a “crypto hangover.”
The Supreme Court’s decision came after a hearing in November to assess whether the case warranted judicial intervention. Despite Nvidia’s arguments that the lawsuit lacked sufficient details to advance to the evidence-gathering phase, the court rejected that defense. The case will now proceed to trial in federal district court in Oakland, California. The attorney representing the shareholders hailed the progress of the case as a “major victory for corporate accountability.”
Despite the turmoil it faced during the cryptocurrency crisis, Nvidia has recently shown an impressive recovery. The company’s stock has gained nearly 190% this year, driven by high demand for GPUs not only for mining, but also for gaming and artificial intelligence applications. Nvidia’s new GeForce 4000 series GPUs have proven highly profitable, outperforming competitors like AMD.
Nvidia recently reported a 95% increase in revenue for the third quarter, reaching $35,1 billion. The company’s data center segment saw 111% year-over-year growth, and is forecast to report $37,5 billion in revenue for the fourth quarter. Earlier this year, Nvidia also achieved a historic milestone by surpassing a market cap of $3 trillion, setting a new standard in the technology industry.
Additionally, in a strategic move to lessen its reliance on volatile markets like cryptocurrency mining, Nvidia announced plans in July to develop infrastructure for advanced humanoid robotics, reaffirming its role as a leader in technological innovation despite ongoing legal battles.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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