NVIDIA Corporation, the tech giant known for its graphics processing units (GPUs), is facing significant turbulence as its stock price dipped by 7% following a U.S. federal court’s decision to allow a class action lawsuit to proceed. Investors have accused the company and its CEO, Jensen Huang, of concealing over $1 billion in revenue generated from crypto-mining-related GPU sales, a revelation that has sent ripples through the stock market and raised eyebrows in the crypto community.
The lawsuit dates back to 2018 and alleges that NVIDIA misled shareholders by attributing its soaring revenue to gaming demand while downplaying the crucial role of cryptocurrency miners in driving sales. Plaintiffs contend that NVIDIA categorized orders from miners under consumer GeForce gaming graphics cards instead of its dedicated crypto product lines. This strategy, they argue, artificially inflated NVIDIA’s portrayal of organic growth in the gaming segment.
Internal documents and testimonies revealed in court suggest that undisclosed revenue linked to crypto mining could range between $1.1 billion and $1.35 billion—far surpassing the figures NVIDIA publicly reported. Some insiders, referred to as “FE 1” and “FE 2,” provided evidence indicating that top executives discussed the impact of miner demand on revenue during sales meetings, contradicting NVIDIA’s claims that crypto mining constituted only a minor fraction of its overall business.
Despite NVIDIA’s defense, which asserts that its exposure to crypto mining was limited to specific product lines, the court found sufficient grounds to certify the class action. Notably, the Digital Chamber of Commerce, an industry group, has backed NVIDIA’s position by urging the Supreme Court to dismiss the case. However, the Securities and Exchange Commission (SEC) has already penalized NVIDIA in the past for failing to disclose the influence of crypto-mining demand on its financial results.
The ramifications of this lawsuit are profound; the drop in stock value reflects investor concerns about potential financial repercussions. When cryptocurrency prices plummeted in late 2018, NVIDIA was forced to revise its revenue forecasts downward, citing reduced demand from miners. This prompted the investor lawsuit that has now gained traction in the courts.
As of now, NVIDIA’s shares are trading at approximately $172, marking a significant decline from their all-time high of $212 reached last October. The situation illustrates the volatility not just of NVIDIA’s stock but also of the broader market dynamics impacting tech companies involved in the cryptocurrency space.