The Supreme Court on Wednesday is likely to keep the class action lawsuit alive Nvidia to mislead investors about their addiction to selling computer chips for mining volatile cryptocurrencies.
The judges heard arguments in the tech company’s appeal of a lower court ruling that allows it to continue a 2018 lawsuit brought by a Swedish investment management firm.
It is one of two lawsuits in a series of class-action lawsuits against tech companies. Last week, judges debated a multibillion-dollar investor lawsuit against Facebook parent Meta over the privacy scandal. Cambridge Analytica political consulting firm.
On Wednesday, the court’s majority, which included both liberal and conservative justices, rejected the arguments of Neal Katyal, a lawyer for Santa Clara, Calif. Nvidia.
“There’s less and less reason why we took this case and why you should have won,” said Justice Elena Kagan.
The lawsuit followed a drop in cryptocurrency profitability that caused Nvidia’s revenue to fall far short of forecasts and the company’s share price to drop 28%.
In 2022, Nvidia paid a $5.5 million fine to settle charges from the Securities and Exchange Commission that it failed to disclose that crypto-mining was a significant source of revenue growth from the sale of graphics processing units produced and marketed for games. The company admitted no wrongdoing in the settlement.
Nvidia has made the artificial intelligence sector one of the biggest companies on the stock market as the tech giant continues to spend heavily on the company’s chips and data centers to train and operate their AI systems.
That dominance in chipmaking has cemented Nvidia’s place as the poster child for the boom in artificial intelligence, which CEO Jensen Huang has called “the next industrial revolution.” Demand for AI-powered products that can compose documents, render images and serve as personal assistants has boosted sales of Nvidia’s specialized chips over the past year.
Nvidia is one of the most valuable companies in the S&P 500, worth more than $3 billion. The company will announce its third quarter earnings next week.
In the Supreme Court case, the company argues that the investor lawsuit should be dismissed because it does not conflict with a 1995 law, the Private Securities Litigation Reform Act, which seeks to prevent frivolous lawsuits.
A district court judge dismissed the complaint before a federal appeals court in San Francisco ruled it could move forward. The Biden administration is protecting investors.
A decision is expected at the beginning of the summer.
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