AI Hype Dials Down as Public Company Shareholder Suits Persist

Public companies are becoming more cautious in statements about what artificial intelligence can do for them amid a rising threat of litigation over the technology’s unrealized promises, attorneys pointing to new data said.

New AI case filings plateaued in 2025, according to reports by Cornerstone Research and the National Economic Research Associates, but so too did the percentage of dismissals after ticking up from a higher denial rate two years ago.

“Companies, their executives, and their disclosure counsel have likely been developing broader sets of warnings and risk disclosures,” said plaintiff’s lawyer Jeffrey Golan, who’s with Barrack, Rodos & Bacine. Courts have also been rejecting investor claims based on non-actionable forward-looking statements or opinions about AI, he said.

AI-related securities class actions increased only slightly after surging in years past, from 15 cases in 2024 to 16 in 2025, Cornerstone reported Jan. 28, together with Stanford Law School Securities Class Action Clearinghouse. AI was the largest of the trend categories the report tracked with most of those cases coming in the first half of the year. NERA counted 17, also showing a slowed pace in the second half of the year—with only one suit filed in the final quarter. Apple Inc. and Tempus AI Inc. were some of the companies targeted last year by investors over their AI-related statements.

Dismissals in 2025 remained even with other cases in 2024. It may be that companies “are being somewhat more careful in terms of what they’re telling the market—either about how they’re going to be utilizing AI or how well they’ll be able to sell AI based platforms to their customers,” Golan said.

Nevertheless, “AI does not seem to be going anywhere,” according to Lara Flath of Skadden, Arps, Slate, Meagher & Flom LLP. “We’ve been talking about that now for some time, and that continues to be borne out” in this data, she said.

“This is going to be a central focus of litigation in the coming years and you can already see the beginnings of that in 2025,” said plaintiffs’ attorney Thomas Laughlin of Scott & Scott Attorneys at Law LLP.

Crypto industry maturation is apparent in the data too. Although federal enforcement has pulled back, private plaintiffs continue to bring cases as crypto companies become more mainstream, Flath said.

Eight of the 14 crypto-related suits filed in 2025 asserted unregistered securities claims, while “six were traditional shareholder suits,” NERA reported.

Crypto companies “will continue to face a lot of the sort of litigation activity that our more traditional clients have faced over the years,” Flath said.

Year-to-Year Fluctuation

The overall number of new securities class actions declined in 2025, according to the reports.

“It has continued to be a very strong market,” University of Pennsylvania’s law professor Jill Fisch said. “And when you see a stock market doing well, you tend to see less securities fraud litigation” because investors need to allege a stock drop, she said.

“It’s been a long-term bull market,” and the lower numbers of suits “might not persist if we see more market turmoil,” Fisch said.

But the decline, which NERA reported as an 11% drop from the number of 2024 cases, may not be meaningful, some attorneys said.

Not counting merger and acquisition suits, 199 cases were filed in 2025. “If you look back in time, you see that number repeated, so it’s around where it’s been,” said Skadden’s Susan Saltzstein. “I didn’t see that as being anything other than robust.”

Cornerstone’s data also shows cases with—in aggregate—larger potential damages since 2018, surging to a high in 2025. The reasons include inflation and also market movement, Jonathan Youngwood of Simpson Thacher & Bartlett LLP said. Further, “firms on the plaintiff side are investing more in cases that are larger, because regardless of strength, they obviously have a greater upside,” he said.

Rising markets are good for companies and good for investors, he said. But when there’s a negative event affecting the stock, “it doesn’t have to be very large” to make a very large case, he said.

Investors Dropping Suits

Attorneys expressed some surprise at a 10-year NERA analysis showing that out of all cases in which a motion to dismiss was filed—which is nearly all cases—plaintiffs voluntarily dropped some 21% of them.

An ongoing concern in federal securities litigation has been “plaintiffs’ lawyers filing suit or threatening to file suit and getting paid off or getting a mootness fee, and that plaintiff goes away, and we don’t have a very transparent look into what’s happened,” said Fisch.

It could be that the motion to dismiss forces a recognition that the case is frivolous, she said. “But we don’t actually know that that’s true. There’s no obligation in federal court to get the court to sign off on that dismissal, and there’s no disclosure of whether the plaintiffs’ attorneys get paid anything.”

Flath also pointed to the data, which derives from the period from 2016 through 2025. The 21% voluntary dismissal rate reinforces, “yet again, how important that motion to dismiss is, whether that’s either in terms of the actual outcome when it’s adjudicated, or even just the fact that it may convince a plaintiff” that the hurdles are too high, she said.

“It’s probably the system working,” said Youngwood. “And if I were to speculate a little bit, a lot of judges, particularly judges in the Southern District of New York, where more cases are filed than anywhere else, often have pre-motion procedures that require letter briefing before a full-blown motion,” he said. Youngwood has even heard judges warn of potential sanctions if plaintiffs’ attorneys have nothing more to add to a case but proceed anyway.

Last year, federal judges in Illinois and Wisconsin imposed sanctions for complaints that didn’t withstand scrutiny.

“Plaintiffs are in this to have good cases, not have bad cases, and they may not realize on Day One that it’s a bad case,” Youngwood said.