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- A US court certifies a class action against Nvidia over crypto-linked GPU sales disclosures.
- Investors allege Nvidia concealed over $1B in mining-driven revenue during 2017–2018.
- Judge cites internal email, says Nvidia failed to dismiss potential stock price impact.
A U.S. court has increased legal pressure on Nvidia after approving a crypto-related investor lawsuit as a class action. The ruling allows more shareholders to join claims that the company misled markets about GPU sales linked to mining.
The decision came from Judge Haywood S. Gilliam Jr. in California. It focuses on whether Nvidia properly disclosed the role of crypto mining in its revenue. Investors claim the company hid over $1 billion in mining-related sales between 2017 and 2018.
Nvidia Faces Claims Over Crypto-Driven GPU Sales
The court said Nvidia did not prove that its statements had no effect on stock prices. This point is central to the case. A key piece of evidence includes an internal email from an executive.
The email raised concerns about high inventory levels. These concerns were tied to earlier company statements. The judge ruled that price impact could not be dismissed at this stage.
Investors argue Nvidia gained from strong demand driven by crypto mining. They say this demand flowed through GeForce gaming GPUs. However, Nvidia had stated that crypto revenue formed only a small part of its business.
The company also said it managed supply risks effectively. It claimed it could handle excess stock if demand dropped. Investors now dispute that position based on later developments.
When crypto demand declined, GPU sales shifted quickly. This created volatility in the market. Investors say the risks were not clearly communicated at the time.
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The issue became more visible in 2018. Nvidia reported slowing demand tied to crypto markets. It also lowered its financial outlook and disclosed rising inventory levels.
Nvidia Faces Review in China Amid Legal Challenges
Later, the company confirmed pressure on its gaming segment. CFO Colette Kress said excess inventory linked to crypto took longer to clear. This added strain to financial performance during that period.
Apart from the court case, the company is also facing scrutiny in China. The government has launched a review of the company to determine if there are any anti-competitive issues. However, the details of the review have not been made public.
The company has stated that it is abiding by all laws. The review is ongoing, and no conclusions have been announced by regulators.
However, the company’s CEO, Jensen Huang, has pointed to the growth in the artificial intelligence sector. He spoke during the company’s GTC conference last week. Huang stated that the demand for chips could rise to $1 trillion in 2027.
The past crypto-related exposure has not been addressed by Huang. Investors are continuing to monitor both legal and regulatory issues. Market reactions may remain sensitive to changes in AI and crypto demand.
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