b'Investors filed putative securities class actions againstIn May 2017, NVIDIA developed a GPU designed Alphabet and its officers, alleging that betweenspecifically for cryptocurrency mining (Crypto SKUs) the discovery of the breach and its announcement,and reported revenues for its Crypto SKUs in its OEM defendants made materially false and misleadingsegmentnot its gaming segment. The Crypto SKUs statements regarding the extent of the breach andwere designed especially for mining and made without users data security in violation of Sections 10(b) andvideo display ports, and thus lacked a secondary market 20(a) of the 1934 Act and Rule 10b-5 promulgatedfor gamers. From May 2017 to May 2018, NVIDIA reported thereunder. Defendants filed a motion to dismiss thesolid revenue growth each quarter from its gaming consolidated amended complaint, which the courtsegment. Throughout that period, defendants made granted, with leave to amend, holding that plaintiffsvarious statements about the impact of crypto-mining failed to plead a misrepresentation, omission of materialon the company. For example, they stated (i) that NVIDIA fact, or scienter. Specifically, the court held that the bugmonitored the cryptocurrency market closely and knew was fixed before the challenged risk factor disclosuresits dynamics, (ii) cryptocurrency was smallbecause were made and thus they were not false. The courtour overall GPU business is so large[,] for NVIDIA, explained [t]here is no support for the position thatbut was a real part of our business, while noting that a remediated technological problem which is noGaming, Professional Visualization, Datacenter, and longer extant must be disclosed in the companysAutomotive core growth drivers were other areas of future looking disclosures. The court further held thatthe business[,] and (iii) we serve the vast . majority of plaintiffs failed to show that the alleged software defectthe cryptocurrency demand out of [the Crypto SKU,] but was material to Alphabets overall business or that itacknowledged there probably is some residual amount materially affected its earnings. The court deemed theor some small amount in terms of cryptocurrency-related remaining challenged statements inactionable puffery. sales in the gaming GPU segment. The court also held that plaintiffs failed to pleadOn August 16, 2018, NVIDIA announced on an earnings scienter, rejecting plaintiffs theory that thecall that it lowered its revenue guidance for its third representations made by Alphabet were intentionallyquarter of 2018 by 2.2%. Thereafter, NVIDIAs CFO and misleading so that their officers could avoid testifyingCEO disclosed that guidance was revised because before Congress at a time when Facebook was facingprior guidance anticipated cryptocurrency to be severe scrutiny for its privacy policies and flaws.meaningful for the year [and] we are now projecting no In reaching this conclusion, the court relied on thecontributions going forward. The next day, NVIDIAs allegations that Alphabet created a privacy task forcestock price fell by 4.9%, from a close of $257.44 per consisting of over 100 of Googles best and brightestshare on August 16, 2018, to a close of $244.82 per engineers, product managers, and lawyers, that thisshare on August 17, 2018. On November 15, 2018, task force discovered the bug during an audit, and thatNVIDIA announced that it missed its lowered 3Q 2018 after discovering the bug, Alphabet remediated it. Therevenue by under 2% and announced guidance for the court held that this rendered the allegations insufficientfourth quarter of 2018 which was a 7% less than theto plead scienter. 4Q 2017. The CFO noted that in 3Q 2018, [g]aming was short of expectations as post crypto channel inventory took longer than expected to sell through. Gaming Iron Workers Local 580 Joint Funds, et al. v.card prices, which were elevated following the sharp Nvidia Corporation, et al., Case No. 18-cv- crypto falloff, took longer than expected to normalize. 07669, 2020 WL 1244936 (N.D. Cal. Mar. 16,She also noted that inventory levels of gaming GPUs 2020); 2021 WL 796336 (Mar. 2, 2021)remained higher than expected. NVIDIAs stock price Crypto Volatility Triggers Reduced Guidance then fell 28.5% over two trading sessions, from a close of $202.39 per share on November 15, 2018, to close at NVIDIA Corporation (NVIDIA) designs and produces$144.70 per share on November 19, 2018.graphic processing units (GPUs). The gaming marketOn December 21, 2018 investors filed a putative is NVIDIAs largest market as gamers utilize graphicsclass action lawsuit against NVIDIA and certain of its cards featuring NVIDIA GPUs. NVIDIAs GPUs areexecutives alleging violations of Sections 10(b) and also used in the original equipment manufacturer20(a) of the 1934 Act and Rule 10b-5 promulgated (OEM) market in devices such as tablets and phones.thereunder based on the theory that defendants In 2016, prices for certain cryptocurrencies beganfalsely represented that gaming revenues were largely to rise and demand for NVIDIAs GeForce Gamingunrelated to sales to crypto-miners. The defendants GPUs rose as crypto-miners turned to NVIDIA GPUs.moved to dismiss the consolidated amended complaint, However, demand for GPUs is tied, in part, to volatilewhich the court granted, with leave to amend.cryptocurrency prices, and thus demand for GPUs can likewise fluctuate dramatically. 15'