Supreme Court allows Nvidia shareholder lawsuit over crypto revenue

The U.S. Supreme Court has decided to allow a shareholder lawsuit against Nvidia to proceed, rejecting the company's appeal regarding allegations of misleading investors about its reliance on cryptocurrency mining revenues.

The lawsuit claims that Nvidia concealed its dependence on crypto sales during a significant market downturn, leading to a sharp decline in stock value after the 2018 crypto crash.

Shareholders argue that CEO Jensen Huang misrepresented the extent to which revenue growth was tied to the sales of GeForce GPUs for cryptocurrency mining rather than gaming.

The court's ruling comes after a November hearing where justices questioned whether the case warranted their intervention.

Nvidia contended that the lawsuit lacked sufficient detail to advance to the evidence-gathering phase.

However, the shareholders' legal representative characterised the ruling as a “major win for corporate accountability,” emphasising the importance of transparency in corporate practices.

The lawsuit will now continue in a federal district court in Oakland, California.

In 2018, Nvidia faced significant challenges when it disclosed that it had fallen short of revenue projections, resulting in a more than 28% drop in stock price over two days.

Huang attributed this shortfall to a “crypto hangover,” reflecting the volatility of the cryptocurrency market.

Despite these legal challenges, Nvidia's stock has surged nearly 190% this year, driven by strong demand for its GPUs and record-breaking revenues.

In its latest financial report, Nvidia announced a 95% year-over-year revenue increase in Q3, reaching $35.1 billion, with projections for Q4 revenue hitting $37.5 billion.

The company has also diversified its business beyond gaming and crypto mining, focusing on areas such as next-generation humanoid robotics.

This lawsuit represents one of two significant class-action cases currently before the Supreme Court involving technology companies, alongside an appeal from Meta regarding investor privacy issues.