Nvidia (NASDAQ:NVDA) is facing legal action from three authors alleging the company’s unauthorized use of their copyrighted books to train its NeMo artificial intelligence (AI) platform, Reuters reported. According to the report, authors Brian Keene, Abdi Nazemian, and Stewart O’Nan claim that their works were utilized as part of a dataset for NeMo’s training to mimic natural language. The dataset was removed in October following reports of copyright infringement.
Nvidia, whose graphics processing units (GPUs) are behind the AI boom, introduced NeMo in 2022. It is a cloud-native framework for building, customizing, and deploying generative AI models.
The authors have initiated legal action on behalf of individuals in the U.S. whose copyrighted materials were used in training NeMo’s language models over the past three years.
Nvidia Is Managing Risk Better than Its Peers
In a similar move, writers Nicholas Basbanes and Nicholas Gage sued tech giant Microsoft (NASDAQ:MSFT) and ChatGPT owner OpenAI in January 2024 for misusing their work to train the AI models.
However, unlike MSFT, Nvidia is managing its legal and regulatory risk better than its peers. Per TipRanks’ Risk Analysis tool, NVDA’s legal and regulatory risks account for 16.7% of its total risks, lower than the industry average of 20.3%. On the contrary, MSFT’s legal and regulatory risks account for 29.6% of its total risks, much higher than the industry average.
This implies that NVDA is relatively less exposed to regulatory and legal headwinds than MSFT and its other peers.
Is Nvidia a Buy, Sell, or Hold?
Nvidia stock has rallied over 281% in one year. Despite this notable appreciation in value, Wall Street is bullish about its prospects. With 39 Buy and two Hold recommendations, NVDA stock has a Strong Buy consensus rating.
While analysts are bullish, the significant rally in NVDA shares restricts the upside potential. Analysts’ average price target on NVDA stock stands at $893.86, implying the stock could rise by only 2.12% from current levels.
