Nvidia faced a downturn in its share price on Monday following news of a lawsuit alleging the unauthorized use of copyrighted works in training artificial intelligence systems. The chip maker’s shares declined by 1.5% to $862.74, reflecting broader market losses.
This decline comes on the heels of Nvidia’s stock closing down 5.6% at $875.28 on Friday, marking a significant swing that saw the company shed $128 billion in market capitalization. Despite these losses, Nvidia remains valued at around $2.19 trillion overall, highlighting the volatility inherent in highly valued technology companies, particularly those associated with artificial intelligence.
The lawsuit, filed by three authors in a Californian court on Friday, alleges that Nvidia utilized their copyrighted works without permission in a data set used to train its NeMo AI platform. The authors seek unspecified damages for themselves and others similarly affected.
In response to the complaint, a spokesperson for Nvidia stated, “We respect the rights of all content creators and believe we created NeMo in full compliance with copyright law.” While the lawsuit may not pose a significant threat to Nvidia, given its primary revenue stream from providing hardware for AI models rather than the models themselves, it underscores the ethical and legal challenges surrounding the widespread adoption of artificial intelligence.
Nvidia’s stock may see further upward momentum depending on the reception of announcements made at its GTC developers’ event, beginning on March 18. Analyst Ben Reitzes from Melius Research emphasized the importance of Nvidia’s ability to drive use cases for Generative AI through partnerships and a full-stack approach, potentially fueling real applications for cloud services, enterprises, and consumers. Reitzes maintains a Buy rating on Nvidia stock with a target price of $1,000.
On Monday, chip stocks showed mixed performance, with Advanced Micro Devices down 4.3% and Intel up 1.5%.
Despite recent fluctuations, Nvidia shares have surged by 77% year-to-date as of Friday’s close. This significant increase far outpaces the 7.4% rise in the S&P 500 index and the 7.2% gain in the Nasdaq Composite over the same period.