The U.S. Supreme Court has dismissed a lawsuit that accuses Nvidia (NVDA) of misrepresenting its reliance on the cryptocurrency mining industry.
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In a one-sentence opinion, the highest court in America dismissed the case as “improvidently granted,” meaning the justices concluded that it had been a mistake to consider the legal case. The result of the ruling is to let the case brought by shareholders proceed. Nvidia had been hoping the Supreme Court would squash the lawsuit.
An investment firm and a pension fund have brought the case against Nvidia, claiming the company concealed its dependence on crypto mining before a 2018 crash sunk the chip maker’s stock price. However, since then both NVDA stock and crypto prices have recovered and risen sharply.
Technical Issues
The main reasons given by the U.S. Supreme Court for refusing to hear the Nvidia case is that it’s just too technical for the justices to interpret and decide. “This is a highly technical subject,” Supreme Court Justice Samuel Alito said. “It just seems to me that you’re asking us to engage in a kind of analysis that we are not very good at…”
The main question before the justices was whether the investment firm and a pension fund suing Nvidia for securities fraud had satisfied a 1995 law, the “Private Securities Litigation Reform Act,” which tightened the requirements for how much detail investors had to provide at the outset of such suits. Lawyers for Nvidia had argued that the plaintiffs had not sufficiently proven that fraud had been committed.
Next steps in the legal case were not immediately clear. NVDA stock has risen 192% this year.
Is NVDA Stock a Buy?
Nvidia stock has a consensus Strong Buy rating among 40 Wall Street analysts. That rating is based on 37 Buy and three Hold recommendations issued in the last three months. The average NVDA price target of $176.14 implies 26.44% upside from current levels.
