This case is one of two high court cases involving class-action lawsuits against tech companies, the other being against Facebook parent Meta. Nvidia argues that the investors' lawsuit should be dismissed as it does not meet the standards of a 1995 law intended to bar frivolous complaints. However, both liberal and conservative justices seemed to reject Nvidia's arguments. A decision is expected by early summer.
Key takeaways:
- The Supreme Court seems likely to allow a class-action lawsuit against Nvidia, accusing the company of misleading investors about its dependence on selling computer chips for cryptocurrency mining.
- The lawsuit followed a dip in the profitability of cryptocurrency, which caused Nvidia’s revenues to fall short of projections and led to a 28% drop in the company’s stock price.
- In 2022, Nvidia paid a $5.5 million fine to settle charges by the Securities and Exchange Commission that it failed to disclose that cryptomining was a significant source of revenue growth from the sale of graphics processing units.
- Nvidia is arguing that the investors’ lawsuit should be thrown out because it does not measure up to a 1995 law, the Private Securities Litigation Reform Act, that is intended to bar frivolous complaints.