SEC and U.S. Department of Justice Support Lawsuit Against Nvidia Over Sales to Crypto Miners

The U.S. Department of Justice and the SEC have backed a class-action lawsuit against Nvidia, claiming the company misrepresented its sales of graphics cards to cryptocurrency miners. In 2017-2018, Nvidia earned $1.73 billion, but attributed $1.126 billion to the gaming segment, concealing its reliance on the cryptocurrency market. The cryptocurrency crash in 2018 negatively impacted Nvidia’s stock, leading to the lawsuit from a group of investors.

Both agencies believe the complaint contains sufficient evidence to proceed with the case, citing a report from the Royal Bank of Canada, which states Nvidia understated its revenues by $1.35 billion from sales to miners. This case is seen as a significant precedent for transparency in corporate reporting.

Nvidia asserts that the accusations are based on false information and denies the claims, stating the lawsuit was fabricated on incorrect data. Nevertheless, amid the boom in the artificial intelligence sector, Nvidia’s stock continues to rise despite the legal battles. In June 2023, the company briefly became the most valuable publicly traded company in the world, and as of the time of writing, its market capitalization stands at $3.01 trillion, second only to Apple and Microsoft.

Nvidia’s Forecast and Future

With the growing interest in artificial intelligence technologies, Nvidia holds a leading position in the industry. However, analysts, including Elliott Management, warn that the AI segment may be overvalued, and there is a risk of a “bubble” that could negatively impact the company’s stock value in the future.