Nvidia wins case alleging underreporting of revenue from GPU sales to miners

A California federal court dismissed a class action against GPU and chip maker Nvidia. The investors alleged the company misstated revenues from selling GPUs to miners.

The lead plaintiff was the Ironworkers Local 580 Joint Fund. According to court documents, it sued on behalf of individuals who purchased Nvidia shares from May 10, 2017 through November 14, 2018.

Judge Haywood Gilliam Jr. found that the applicant’s witnesses — former Nvidia employees — failed to prove that the company acted with “conscious disregard” in deciding not to disclose revenue information.

“The plaintiffs must point to facts reflecting some degree of intentional or conscious misconduct,” the ruling states.

The court also rejected the plaintiffs’ arguments that the company violated securities laws.

The suit lasted from 2018. The plaintiffs alleged that for 2017-2018 Nvidia earned about $1.73 billion from selling equipment to miners, but $1.126 billion of that was knowingly attributed to the gaming segment. They argued this hid Nvidia’s growing exposure to the cryptocurrency market.

In 2019, RBC analyst Mitch Steves did not rule out that the firm could have halved its mining-segment revenue.

In July 2020, Nvidia said the Prysm Group study cited in the suit was based on assumptions and conjecture. The lawyers described the allegations as unfounded, as the actual purpose behind purchasing GPUs could not be determined.

In January 2021, Nvidia representatives allowed the release of specialized GPUs for mining as demand rose.

In February, the company warned that the mining capabilities of GeForce RTX 3060 GPUs would be limited.

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