A U.S. district court allowed a class-action lawsuit against Nvidia and CEO Jensen Huang to proceed, following investor claims that over $1 billion of the company’s crypto revenue was hidden in its gaming GPU sales. The court also found that Nvidia failed to prove its crypto-mining revenue disclosures could not have affected the stock price. The case centers on claims that Nvidia’s crypto-linked revenue disclosures were misleading and potentially misvalued the stock. A Wednesday filing indicates that during the 2017-2018 crypto boom, Nvidia misled investors by suggesting they were buying gaming GPUs, when sales were tied to the crypto market.
As crypto prices fell, Nvidia faced substantial unsold inventory that contributed to a stock decline. Plaintiffs allege they were not disclosed roughly $1.3 billion of such revenue, and that Huang downplayed actual demand. The plaintiffs also note that Nvidia launched a crypto-specific SKU chip whose sales were recorded under mining revenue, arguing this move was designed to reassure investors that gaming and mining revenues were separate. The defense contends these statements were not intended to influence investors and thus had no price impact, but a judge found otherwise, citing an internal email as evidence.
The court stated there was evidence suggesting the stock price remained elevated due to prior statements, indicating potential price impact. As a result, the class action was allowed to proceed and a hearing was scheduled for April 21. In 2018, the crypto market weakened, Nvidia lowered revenue guidance, and miners were reportedly purchasing Nvidia GPUs, with inventory rising. Regulators later fined the company $5.5 million for failing to disclose how crypto mining affected its general revenue, and regulators said investors should have been told that miners were a major driver of GPU demand.
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