Investors allege Innodata inflated stock price through false statements about its AI technology. Lawsuit claims company's AI platform is rudimentary and its R&D spending misrepresented.
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| Lawsuit alleges company misrepresented its AI integration in lucrative deals. Image: Innodata |
Innodata Inc.'s share price plunged recently after investors filed a class action lawsuit alleging the company misled them about its artificial intelligence (AI) technology and financial prospects.
The lawsuit, filed by Rosen Law Firm, accuses Innodata of inflating its stock price through misrepresentations regarding its Goldengate AI platform, AI research and development spending, and planned AI integration in new contracts.
The allegations center around Innodata's flagship Goldengate platform, which the lawsuit claims is a rudimentary product developed by a limited team.
Investors allege Innodata misrepresented the platform's capabilities and its investment in further development.
Additionally, the lawsuit contends that Innodata misled investors about its plans to utilize AI in lucrative Silicon Valley contracts, suggesting such integration was far less extensive than portrayed.
Innodata vehemently denied the accusations, stating its AI technology is robust and its financial disclosures were accurate. The company vowed to "vigorously defend itself" against the lawsuit.
The lawsuit sent shockwaves through the already volatile AI sector, raising concerns about the potential for inflated valuations based on overhyped AI capabilities.
Investors dumped Innodata shares, driving the price down by 15% in early trading.
Analysts warn that the lawsuit's outcome could have wider implications for the AI industry, potentially prompting increased regulatory scrutiny of AI disclosures and investor skepticism towards AI-driven valuations.