The U.S. Supreme Court announced on Monday that it will hear Nvidia Corp.’s appeal in a securities fraud lawsuit filed by shareholders. The class-action suit alleges that the company and its CEO, Jensen Huang, intentionally misled investors by downplaying how much of its revenue growth in 2017 and 2018 was tied to the volatile cryptocurrency market.
The case centers on claims that Nvidia presented its surging sales as being driven by the stable and growing video game market, while knowingly attributing a significant, undisclosed portion of its GPU sales to crypto miners. When the demand for crypto mining hardware collapsed in late 2018, Nvidia’s stock price plummeted, leading to significant losses for investors and triggering the lawsuit.
Shareholders argue that internal documents and statements demonstrate executives were aware of the crypto-driven sales boom and its potential volatility but chose to obscure this information from the public. Initially dismissed by a lower court, the lawsuit was revived in 2023 by the San Francisco-based 9th U.S. Circuit Court of Appeals, which found that the shareholders had adequately alleged that Nvidia and Huang made “false or misleading statements with intent to deceive.”
Nvidia has consistently denied the allegations, arguing that it was impossible to track the end-use of its gaming GPUs with certainty and that the lawsuit is based on speculation rather than concrete evidence. The company’s appeal to the Supreme Court contends that the 9th Circuit’s ruling makes it too easy for shareholders to bring “meritless” lawsuits against corporations.
The Supreme Court’s decision to take the case, which will likely be heard in its next term, will have significant implications for corporate disclosure standards. Its ruling could redefine the legal requirements for how publicly traded companies must report on their exposure to volatile markets and what constitutes securities fraud.
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