skyrocket

Nvidia (NVDA -0.31%) stock has been a fantastic performer over the short and long terms. Shares of the artificial intelligence (AI) chip and infrastructure leader have returned 1,440% and 26,960% over the last three years and decade, respectively, as of Friday, Oct. 17. These performances have transformed a $1,000 investment into $15,400 and $270,600, respectively. By comparison, one grand invested in the S&P 500 index has turned into $1,894 in three years and $3,910 in 10 years.

With Nvidia stock’s eye-popping gains, it’s easy to wonder if you missed your chance at buying shares. The answer is no, in my view, as Nvidia stock has many years of great performance left.

There are two reasons for my optimism. First, the AI revolution is still in its early stages. Second, Nvidia’s graphics processing units (GPUs) are the gold standard for processing AI workloads, and there is no indication that they’re in danger of losing that status, at least not for some time.

Below are my prediction ranges (a best case and a base case) for Nvidia stock’s price in about five years, or by the end of 2030. My estimates are built upon data provided by Nvidia’s CEO and CFO on the company’s most recent quarterly earnings call. (Nvidia’s earnings calls are chock-full of valuable data — and listening to them is worth the time.)

Image source: Getty Images.

Nvidia CFO: “We see $3 [trillion] to $4 trillion in AI infrastructure spend by the end of the decade.”

From CFO Colette Kress’ remarks on Nvidia’s fiscal second-quarter earnings call in late August:

We are at the beginning of an industrial revolution that will transform every industry. We see $3 [trillion] to $4 trillion in AI infrastructure spend by the end of the decade. The scale and scope of these [AI infrastructure] buildouts present significant long-term growth opportunities for Nvidia Corporation. [Emphasis mine.]

Numbers from CEO: 58% to 70% of an AI faciility’s cost goes to Nvidia

From CEO Jensen Huang’s remarks on the fiscal Q2 earnings call:

And so our contribution … is a large part of the AI infrastructure. Out of a gigawatt AI factory, which can go [cost] anywhere from … $50 to $60 billion, we represent about $35 [billion] plus or minus of that.

Huang is saying that a typical 1-gigawatt AI data center or other AI facility costs about $50 billion to $60 billion to build, and that about $35 billion of that cost is for Nvidia’s AI technology.

So, about 58% ($35 billion divided by $60 billion) to 70% ($35 billion divided by $50 billion) of the total cost of an AI facility is the cost of buying Nvidia’s tech.

Putting together the data provided by Nvidia’s CFO and CEO

Kress said the company expects total global AI infrastructure spending to be $3 trillion to $4 trillion annually by the end of the decade. (It’s not clear whether she meant by 2029 or 2030, but I’m using 2030 to be conservative. Moreover, Nvidia just published a presentation that uses the $3 trillion to $4 trillion projection by 2030.)

Of that $3 trillion to $4 trillion, Nvidia stands to take in 58% to 70% of it, according to Huang. This assumes that percentage range remains about the same. This will be part of my “best-case estimate,” but I am also going to calculate a “base-case estimate” that assumes Nvidia’s percentage of total AI infrastructure spend declines moderately, by 20%. This will account for the potential for increased competition by chipmaker Advanced Micro Devices (AMD) and others.

Revenue from AI infrastructure spend that Nvidia should generate in about five years:

• Best-case estimate: 58% to 70% of $3 trillion to $4 trillion = $1.74 trillion to $2.8 trillion.
• Base-case estimate: 46% to 56% (I chopped 20% off the percentages in the best-case range) of $3 trillion to $4 trillion = $1.38 trillion to $2.24 trillion.

Calculating my Nvidia stock price target ranges for 2030

Now, I’ll use the numbers calculated above to come up with price target ranges for Nvidia stock in about five years. Two additional data points needed:

• Nvidia stock’s closing price on Oct. 17: $183.22.
• Nvidia’s AI-driven data center revenue was $41.1 billion (of its total revenue of $46.7 billion) in its most recently reported quarter (fiscal Q2, ended July 27). This equates to an annual run rate of $164.4 billion ($41.4 billion X 4).

Nvidia stock best-case price target in five years: $1,942 to $3,115.

1. Nvidia’s projected AI infrastructure revenue in five years: $1.74 trillion to $2.8 trillion.
2. Nvidia’s AI infrastructure revenue currently: annual revenue run rate of $164.4 billion.
3. Step 1 numbers divided by Step 2 number: 10.6 to 17.0. This means Nvidia’s annual data center revenue should increase by 10.6 to 17.0 times in 5 years.
4. Nvidia stock price at market close on Oct. 17: $183.22.
5. Valuation assumption: I am assuming that Nvidia stock’s earnings-based valuation will remain the same in five years. That’s because its valuation is reasonable now given its growth and projected growth dynamics, in my view. (Trailing and forward price-to-earnings (P/E) ratios are 51.5 and 28.7, respectively.)
6. The above assumption means the conversion from revenue growth (Step 3 numbers) to stock price growth will be straightforward.
7. $183.22 X 10.6 to 17.0.
8. Stock price target in five years: $1,942 to $3,115.

Nvidia stock base-case price target in five years: $1,300 to $2,125.

1. Nvidia’s projected AI infrastructure revenue in five years: $1.38 trillion to $2.24 trillion.
2. Nvidia’s AI infrastructure revenue currently: annual run rate of $164.4 billion.
3. Step 1 numbers divided by Step 2 number: 8.4 to 13.6. So, Nvidia’s annual data center revenue should increase by 8.4 to 13.6 times in five years.
4. Nvidia stock price at market close on Oct. 17: $183.22.
5. Valuation assumption: I am assuming that Nvidia stock’s earnings-based valuation remains the same in five years.
6. The above assumption means the conversion from revenue growth (Step 3 numbers) to stock price growth would be straightforward.
7. BUT, I’m going to assume that the data center platform’s profitability declines modestly due to the possibility of increased competition. I can adjust the factors in Step 3 down by 15% to account for this since I had been assuming a straightforward relationship between revenue, earnings, and price target growth.
8. [8.4 to 13.6] x [85%] = 7.1 to 11.6.
9. $183.22 X 7.1 to 11.6.
10. Stock price target in five years: $1,300 to $2,125.

Why there is upside to both these target ranges

I only considered Nvidia’s data center market platform growth when calculating my price targets. That’s because this AI-driven platform accounts for the vast majority of the company’s revenue and earnings — and stock price gains are usually driven by earnings growth.

In the first half of the current fiscal year, the data center platform accounted for 88% of Nvidia’s total revenue. And it accounted for an even higher percentage of total earnings. That percentage is unknown because management does not break out earnings or other profitability metric by platform. But management has said that its data center platform is more profitable than its overall business. So, the data center platform probably accounts for in the mid-90% of total earnings.

If one or more of the company’s other market platforms (gaming, professional visualization, and auto) grows revenue and earnings tremendously over the next five years, that should be upside for my price targets. The auto platform has the potential to be a big winner over the next five years due to driverless vehicles steadily progressing toward legality. Nvidia’s end-to-end AI-powered driverless tech platform is widely adopted.

Caveat about the economy and overall stock market performance

My estimates assume the U.S. economy remains in at least a minimal growth mode and the stock market remains in a bull market for much of the next five years.

I don’t think a mild and relatively brief recession would derail my Nvidia stock price targets, at least not by much, but a deep or long-lasting recession and long-lasting bear market would almost surely derail them.

My wrap-up

Nvidia stock best-case price target in five years: $1,942 to $3,115. (Of course, the stock would most likely split before it reached these levels, but the underlying growth remains the same.) This equates to Nvidia’s stock price increasing by 10.6 to 17.0 times. It also equates to a compound annual growth rate (CAGR) of 60% to 76%.

Nvidia stock base-case price target in five years: $1,300 to $2,125. This equates to Nvidia’s stock price increasing by 7.1 to 11.6 times. It also equates to a CAGR of 48% to 63%.

Taken together, the Nvidia stock price target range in five years is $1,300 to $3,115.

Shares of Intel (INTC 22.81%) are flying this week, up 27% as of market close on Thursday. The jump comes as the S&P 500 and Nasdaq-100 gained 0.7% and 1.5%, respectively.

The chipmaker’s stock exploded this week after Nvidia announced a $5 billion investment and “multigeneration” partnership agreement with Intel.

Nvidia bets on Intel

On Thursday, Nvidia said it is investing $5 billion into the struggling company at a purchase price of $23.28 a share. Under the partnership terms, Intel will make custom CPUs that Nvidia will use in its AI data center platforms. Intel will also make use of Nvidia’s technology to enhance its PC offerings.

Intel’s CEO, Lip-Bu Tan, said the move will help the company in its turnaround efforts, allowing it to “go to market to win.” A key question remains on what the deal will mean for Intel’s foundry business. Nvidia’s Jensen Huang told investors that Taiwan Semiconductor Manufacturing Company (TSMC) will remain its primary fabricator. However, it’s possible that Nvidia could still make use of Intel’s manufacturing capabilities for certain products.

Image source: Getty Images.

Nvidia’s stake could make the difference for Intel

This is a critical time for Intel. The dominant U.S. chipmaker for years, the company fell behind in the age of generative AI. Its top and bottom lines have taken a severe beating, and the company has gone through significant restructuring and major layoffs in an attempt to stabilize its balance sheet.

While this investment is certainly encouraging, there are still some questions, especially around Intel’s manufacturing. This could be a major step in Intel’s revival, or it could be an early step in Intel being stripped for parts. One Wall Street manager said the company could become “a shadow of its former self” with a fate similar to that of Xerox.

I’m cautiously optimistic. For investors comfortable with risk, Intel is a good pick.

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Prices for the eponymous Swiss watches, Swiss chocolate and Swiss cheese could skyrocket in a week as a result of President Trump’s trade war.

Switzerland, home to some the world’s most recognizable luxury brands, now faces an upcoming 39% tariff from the U.S. Industry groups on Friday warned that both Swiss companies and American consumers could pay the price.

Trump signed an executive order Thursday placing tariffs on many U.S. trade partners — the next step in his trade agenda that will test the global economy and alliances — that’s set to take effect next Thursday. The order applies to 66 countries, the European Union, Taiwan and the Falkland Islands.

In Switzerland, officials failed to reach a final agreement with the U.S. after Trump initially threatened a 31% tariff in April. Swiss companies will now have one of the steepest export duties — only Laos, Myanmar and Syria had higher figures, at 40-41%. The 27-member EU bloc and Britain, meanwhile, negotiated 15% and 10% tariffs, respectively.

Figure came as a surprise

The Swiss government spent Friday — the country’s National Day — reeling from the news. Swiss President Karin Keller-Sutter said that the 39% figure was a surprise, because negotiators had hashed out a deal last month with the Trump administration that apparently wasn’t approved by the American leader himself.

“We will now analyze the situation and try to find a solution,” Keller-Sutter told reporters. “I can’t say what the outcome will be, but it will certainly damage the economy.”

The U.S. goods trade deficit with Switzerland was $38.5 billion last year, a 56.9% increase over 2023, according to the Office of the United States Trade Representative. Keller-Sutter said that she believes Trump ultimately chose the 39% tariff, because the figure rounded up from the $38.5 billion goods trade deficit.

“It was clear that the president was focused on the trade deficit and only this issue,” she said.

Time is ticking for watch companies

For Swiss watch companies, whose products already come with price tags in the tens of thousands — if not the hundreds of thousands — of euros, a timepiece for an arm could cost a leg, too, come next week.

The 39% figure was especially galling to the Federation of the Swiss Watch Industry, because Switzerland in 2024 got rid of import tariffs on all industrial goods.

“As Switzerland has eliminated all custom duties on imported industrial products, there is no problem with reciprocity between Switzerland and the U.S.,” the federation said in a statement. “The tariffs constitute a severe problem for our bilateral relations.”

Swiss watch exports were already facing a prolonged slowdown, with significant declines in the United States, Japan and Hong Kong, according to the federation’s June figures, the most recent available.

Swatch and Rolex declined to comment Friday. Representatives for Patek Philippe, IWC and Breitling didn’t respond to requests for comment.

Sour taste for Swiss chocolatiers

Multinational chocolatiers Nestlé and Lindt & Sprüngli said they have production lines in the U.S. for American customers. But small- and medium-sized Swiss companies are predicted to suffer under the tariffs.

Roger Wehrli, chief executive of the Association of Swiss Chocolate Manufacturers. also known as Chocosuisse, said Switzerland exports 7% of its chocolate production to the U.S.

It’s not just the 39% tariff that’s the issue. Once the manufacturers factor in the exchange rate between U.S. dollars and Swiss francs ($1 to 1.23 francs on Friday), Wehrli said, it’s close to a 50% increase in costs for the Swiss companies. And that’s a big number to pass on to American consumers, if the already-slim margins aren’t further reduced.

“I expect that our industry will lose customers in the United States, and that sales volumes will decrease heavily,” he told The Associated Press.

Wehrli said that he wants Swiss chocolatiers to sell to other markets around the globe to make up the difference. Still, he hopes American customers remember that Swiss quality beats cheaper quantity.

“I think even if prices for Swiss chocolate increase due to the very high tariffs, I think it’s worth (it) to buy Swiss chocolate,” he said. “It’s worth (it) to really eat it consciously and to really enjoy it instead of eating a lot.”

Tough pill for Swiss pharmaceuticals

Swiss pharmaceuticals powerhouse Roche says that it’s working to ensure its patients and customers worldwide have access to their medications and diagnostics amid the Trump tariff war.

“While we believe pharmaceuticals and diagnostics should be exempt from tariffs to protect patient access, supply chains and ultimately future innovation, we are prepared for potential tariffs being implemented and confident in managing any impacts,” the statement said.

The company in April announced that it plans to invest $50 billion in the United States over the next five years, creating 12,000 jobs. The company already employs more than 25,000 people in the U.S.

Meanwhile, Novartis, another major Swiss pharmaceutical firm, said in a statement that it was reviewing Trump’s executive order.

“We remain committed to finding ways to improve access and affordability for patients,” it said.

Dazio writes for the Associated Press. AP writers Pietro De Cristofaro in Berlin, and David McHugh in Frankfurt, Germany, contributed to this report.

Ever since operetta composer Victor Herbert sued Shanley’s restaurant in New York in 1917 to force it to pay for playing his song on a player-piano, songwriters and music publishers have depended on Performing Rights Organizations to make sure they get compensated.

For much of the last century, three organizations dominated the industry, a relatively staid and unglamorous corner of the music scene that remained largely unchanged throughout the eras of radio, records and CDs. But the rise of streaming has led to a surge in revenue and spawned a handful of new organizations looking to cash in.

Now there are at least half a dozen PROs in the United States, representing songwriters and publishers, each demanding that bars, restaurants, hotels and other venues pay a fee or risk being sued.

Businesses say the rising licensing costs have become overwhelming, and some question whether it’s even worth playing music at all. The House Judiciary Committee last fall asked the Copyright Office to investigate the current system and consider potential reforms. In February, the Office opened an inquiry and received thousands of comments from businesses and songwriters.

“The growing proliferation of PROs and their lack of transparency have made it increasingly difficult to offer music in our establishments,” hundreds of small businesses from across the country wrote to the Copyright Office in a joint letter.

“The issue is not that small businesses are unwilling to pay for music,” they wrote, adding that the current system is unfair and untenable. “Small businesses can be left feeling like PROs have them over the proverbial barrel.”

Creating a welcoming ambiance in a restaurant or yoga studio isn’t as simple as putting on a Spotify playlist. Streaming has unleashed trillions of songs, and every one must be licensed and have royalties paid to the songwriter whenever any track is played in public. Violations can cost up to $150,000 per infringement.

This booming market for music publishing has led to a windfall for the two major PROs. The American Society of Composers, Authors and Publishers, founded in 1914, and BMI, established in 1939, together represent more than 90% of musical compositions in the U.S. today with talent lists covering Taylor Swift, Olivia Rodrigo, Jay-Z, Lady Gaga and Eminem, to name a few. SESAC, founded in 1931, rounds out the original three and operates on an invite-only basis.

ASCAP, the oldest and, as a nonprofit, the only PRO to publicly share data on its collections and payout, has seen revenue jump to $1.8 billion in 2024 from $935 million in 2010. Broadcast Music Inc., in its last public report as a nonprofit in 2022, showed record revenue of $1.6 billion, with 48% of that from digital sources.

This kind of growth hasn’t gone unnoticed. In just over the last 12 years, three new PROs have emerged. Legendary music manager Irving Azoff founded Global Music Rights in 2013, offering “boutique services” and royalty transparency, building a stable of more than 160 high-profile songwriters such as Bad Bunny and Bruce Springsteen.

AllTrack, founded in 2017, caters to smaller, independent songwriters. Pro Music Rights launched in 2018 and says it represents more than 2.5 million musical works, including AI-created music.

Many songs today are composed by several songwriters, each of whom could be affiliated with a different PRO. Therefore, to legally play those songs, establishments must pay for a license from each PRO. Most PROs offer blanket licensing agreements, meaning that they provide access to their entire repertoires for one fee. And while that gives a particular venue a wide range of musical freedom, it also means bars and restaurants are paying for thousands of songs they may never play or are essentially paying twice, in instances where a song with multiple writers is represented by more than one PRO.

The National Restaurant Assn. said its members pay an average of $4,500 per year to license music, or 0.5% of the average U.S. small restaurant’s total annual sales.

“This may not seem like a large amount, but for an industry that runs on an average pre-tax margin of 3%-5%, this cost is significant, especially since operators don’t clearly understand what they get for this particular investment aside from avoiding the very legitimate threat of a business-ending lawsuit,” the association wrote in public comments to the Copyright Office.

The American Hotel & Lodging Assn. said the mushrooming number of PROs has led to “significant increases in both financial and administrative burdens.” It gave an example of one “major global hotel chain” that reported the cost per hotel for PRO license fees rose by about 200% from 2021-25, with some hotels seeing increases of 400% or more.

A large hotel that hosts occasional live music events could be paying a single PRO $5,000 to $20,000 a year. If it’s paying all of the major PROs, it could be incurring as much as $80,000 in fees, according to the association.

BMI said its licensing fees have remained “relatively steady over the years” and are based on objective criteria that apply equally to all similar businesses. Fees for individual bars and restaurants start at just over $1 a day, according to BMI. Other factors that go into licensing fees include the occupancy rate, and the type of music being played — live, DJed or recorded, for example.

Songwriters’ livelihoods

In the 1917 Supreme Court case that delivered Herbert his victory over Shanley’s, Chief Justice Oliver Wendell Holmes wrote: “If music did not pay, it would be given up.”  He wasn’t only referring to the songwriters, but also to the venues themselves and addressing whether music helped generate revenue. The ruling was a win for Herbert personally but also for ASCAP, which he had helped found, and established the royalty payment system that’s largely still in use today.

A spokesperson for ASCAP said an increase in fees paid to songwriters by venues is an appropriate and inevitable outcome of a growing market. The organization’s musical repertoires have grown exponentially over the years to include tens of millions of works, giving music users more music and more choice, the spokesperson said. ASCAP says about 90 cents of every dollar it collects from licensees is made available for distribution to its members as royalties.

“Licensees are seeking more regulation of PROs because they want to pay songwriters less,” ASCAP Chief Executive Elizabeth Matthews said in a statement to Bloomberg. “If transparency, efficiency and innovation are the goals, more free market competition among PROs is the answer— not unnecessary government intervention.”

Songwriters depend on PROs for their livelihoods, especially in the streaming era. Many individual songwriters wrote to the Copyright Office in defense of the PRO system, expressing concern that government regulation would only diminish their hard-won earnings.

“Every royalty payment I receive represents not just compensation for my work, but my ability to continue creating music that enhances these very businesses,” wrote Joseph Trapanese, a composer who has created scores for film and TV.

Performance royalties make up about half of total publishing revenue, which is collected by PROs and dispersed to songwriters, according to the National Music Publishers’ Assn. Last year, only about 5% of songwriters’ earnings came from bars, restaurants and other venues, a figure that is “significantly undervalued,” according to NMPA executive vice president and General Counsel Danielle Aguirre.

“There is a substantial opportunity for growth here,” she said, speaking at the group’s annual meeting in June.

The organization set a goal to significantly increase that money over the next year, likely by enforcing licensing requirements.

Several establishment owners equated the PRO’s efforts to collect fees to a mob-like shakedown, citing aggressive on-site confrontations and threatening letters.

BMI said it spends a lot of time trying to educate business owners on the value that music brings to their establishment, federal copyright law requirements and the importance of maintaining a music license.

Lawsuits are always a last resort, a spokesperson said, which is why BMI spends sometimes years on educational outreach. If those efforts are ignored, however, an in-person visit might occur, and BMI may take legal action.

Opaque, bureaucratic

Despite their differences, songwriters and businesses agree that the current system is opaque and bureaucratic and could serve both sides better.

Businesses complain about the lack of a comprehensive database of songs and the fact that there is no easy system for reporting which songs they’ve played. Meanwhile, songwriters claim that the sheer volume of music and businesses throughout the U.S. makes it hard to track where and when their work is played and to know whether they’ve been properly compensated.

“What’s really being called to question is, is this system working accurately—is the money that should be finding its way to the songwriters’ pockets finding its way in an efficient manner?” said George Howard, a professor at Berklee College of Music. “And the answer is ‘no.’ There’s no excuse for that with the level of technology we have today.”

BMI and ASCAP joined forces in 2020 to launch Songview, a free digital database showing copyright ownership and administration shares for more than 20 million works. The two PROs are exploring including GMR and SESAC, which would add even more songs to the platform.

Some of the complaints about the PRO licensing system go back decades. Michael Dorf, a producer and founder of the legendary Manhattan music club The Knitting Factory, has faced off with PROs numerous times over his 30-some years as a venue operator. In the 1990s, he signed singer-songwriters who performed at his club to his publishing company and submitted their setlists to the PROs, assuming he and his acts would reap the resulting royalties from their performances.

But no money came in

“We didn’t receive one penny,” Dorf, who’s also the founder and chief executive officer of City Winery, said in an interview. “To me, there is a cost of doing business, and we want to have the artists and the songwriters properly paid — we love that. What’s simply frustrating is to pay money and know it’s not going to the reason why it’s being collected.”

Caleb Shreve, a songwriter and producer who’s worked with the likes of Jennifer Lopez and is also chief executive at Killphonic Rights, a rights collection organization, said he hears music he has produced “all the time in yoga spots and bars, and I’ve never seen them on publishing statements.” Many songwriters are convinced the current system favors the biggest artists at the expense of middle-tier and emerging songwriters. Because of the blanket licensing system, BMI and ASCAP don’t track individual song use by those licensees and instead rely on proxy data, like what’s popular on the radio or through streaming platforms, to divvy up those collected fees.

Sometimes radio hits mimic what’s played in an arena, restaurant or bar, but not always.

ASCAP said it tracks trillions of performances every year across all media platforms and only uses sample surveys or proxy data when obtaining actual performance data isn’t feasible or is cost prohibitive.

Technology could be a way to solve the current issues without regulation. London-based Audoo is one company leading the way.

Founded by musician Ryan Edwards in 2018 after he heard his music being played in a department store and discovered he wasn’t getting paid for it, the growing startup uses proprietary listening devices it places in cafes, gyms and other public venues to recognize and log songs. It uploads the data to the cloud, ensuring every artist — not just the chart toppers — receives compensation for their work.

The company has attracted investment from music icons including Elton John and Adele, and its devices are used by PROs in the U.K. and Australia. It made its first foray into the US earlier this year, placing listening devices in about 180 establishments around the Denver area in a test run.The collected data underscored that what’s played in public places doesn’t necessarily mirror what’s on the popular playlists or radio and streaming platforms. Edwards likens the idea of using proxies to political polling — directionally helpful but not precise.

Audoo found that 77,000 unique tracks were played around Denver over two months, split among 26,000 artists, according to data viewed by Bloomberg News. On average, only 6.6% of the top-40 songs played in the venues also appeared on Billboard’s top radio-play chart.

In markets where Audoo has partnered with venues, Edwards said business owners have been proud to support particular songwriters and the music business writ large.

“All of a sudden it went from a push-and-pull of, ‘Why do I owe you money?’ to, ‘OK, I can understand music is funding the people who create,’” Edwards said.

Carman and Soni write for Bloomberg.

The amount of money that the city of Los Angeles pays annually for police misconduct, trip and falls, and other lawsuits has ballooned, rising from $64 million a decade ago to $254 million last year and $289 million this fiscal year.

The reasons are complicated, ranging from aging sidewalks to juries’ tendency to award larger judgments to possible shifts in legal strategy at the city attorney’s office to an increase in the sheer number of lawsuits against the city.

The biggest chunk of payouts over the past five years were for “dangerous conditions” — lawsuits singling out faulty city infrastructure, such as broken elevators — at 32%, followed by civil rights violations and unlawful uses of force at 18%, and traffic collisions involving city vehicles also at 18%.

City officials have cited the legal payouts as a significant factor in a nearly $1-billion budget shortfall for fiscal year 2025-26 that was closed with layoffs and other spending cuts.

City Atty. Hydee Feldstein Soto, who took office in December 2022, heads the office that defends the city against lawsuits.

In an interview with The Times and public appearances throughout the city, Feldstein Soto cited a backlog of cases from the COVID-19 pandemic, when courts were barely moving, that were settled or went to trial in recent years.

“Structured settlements” negotiated by her predecessor, Mike Feuer, which are paid out annually rather than in one lump sum, have also contributed to the tab, she said.

Feldstein Soto also said she believes juries are increasingly antagonistic to city governments, resulting in larger verdicts.

Feuer said in an interview that the city was entering into structured settlements before he took office, and he does not believe he increased their use.

To explain the rise in legal liability payouts during his tenure — from about $40 million in 2013 to about $91 million in 2022 — Feuer cited a lack of investment in city infrastructure like streets and sidewalks during the 2008 financial crisis.

In public appearances, Feldstein Soto has sometimes blamed plaintiffs for trying to get financial compensation for what she characterized as risky behavior or interpersonal disputes.

Speaking to the Sherman Oaks Homeowners Association earlier this year, she said that two types of lawsuits — “dangerous conditions” lawsuits and those brought by city employees over working conditions — are ripe for abuse. Some employees who sue the city simply don’t like their bosses, Feldstein Soto said, citing a lawsuit by an LAPD captain, Stacey Vince, who alleged that higher-ups retaliated against her after she complained about her boss. Vince was awarded $10.1 million by a jury, and the city subsequently settled the case for just under $6 million.

Feldstein Soto also described one man who sued the city as an “idiot.” The man was riding his electric scooter without a helmet, Feldstein Soto said, when he crashed on an uneven sidewalk and into a nearby tree, suffering a traumatic brain injury.

According to Feldstein Soto, taxpayers ultimately pay the price for these lawsuits.

“Please understand that every dollar you award is your money,” she said.

The number of lawsuits filed against the city has risen each year since the pandemic, from 1,131 in 2021 to 1,560 in 2024.

At the same time, the average amount the city pays per case has increased dramatically, from under $50,000 in 2022 to $132,180 in 2024. A contributing factor is the increase in payouts of least $1 million, with 17 such cases in 2022 and 39 in 2024. (The city counts settlements or jury verdicts in the fiscal year they are paid out, not when the dollar amount is decided.)

From July 2024 to March 2025, the city paid $1 million or more in 51 lawsuits.

Feldstein Soto said these “nuclear verdicts” cut deep into the city budget and could raise payouts for similar cases in the future.

Total annual payouts in police misconduct cases jumped from $15 million in 2020 to $50 million in 2024. Dangerous conditions cases rose from around $41 million in 2020 to about $84 million in 2024.

Earlier this year, the city paid $21 million to plaintiffs in a series of lawsuits related to a botched LAPD bomb squad fireworks detonation that injured more than 20 people and displaced many residents.

Also this year, the city paid out a $17.7-million verdict to the family of a man with mental health issues killed by an off-duty LAPD officer.

This coming fiscal year, the city increased its allocation for liability payouts from about $87 million to $187 million — far less than what it has been paying in recent years — out of a $14-billion budget.

City Councilmember Eunisses Hernandez, who chairs the council’s public works committee, said the rising payouts stem in part from the city’s long-term lack of investment in infrastructure. The city spent about 10% of its overall budget on streets and other public works last year — substantially less than it spent on police, said Hernandez, who favors a smaller LAPD.

“As a city, we don’t invest in the maintenance of our city,” she said. “I have felt like I’ve been screaming into the void about some of these things.”

In one lawsuit paid out this year, the city agreed to give $3 million to a man who tripped over a slightly uneven sidewalk and suffered a traumatic brain injury.

Last April, the city reached a $21-million settlement with a man whose skull was broken by a street lamp part that fell on him. The city had gone to trial, with a jury awarding the man $22 million, but the parties eventually settled for the slightly lower amount.

“I believe the driving force is the delays and lack of maintenance of the city that has caused an increase in such incidents,” said Arash Zabetian, a lawyer for the man hit by the streetlight.

Some plaintiffs’ attorneys say that Feldstein Soto’s legal strategies are contributing to the rising liability costs. They assert that she is taking more cases to trial, resulting in larger verdicts than if she had settled.

Matthew McNicholas, an attorney who often sues the city on behalf of police officers, said he recently went to trial in five cases and won all of them, for a total payout of more than $40 million.

He would have been happy to settle all five cases for a total of less than $10 million, he said.

One of the lawsuits, which ended with a $13-million verdict, was filed by two male officers accused of drawing a penis on a suspect’s abdomen. The officers alleged that higher-ups did not cast the same suspicion on their female colleagues.

In another of the lawsuits, a whistleblower alleged that he was punished for highlighting problems in the LAPD Bomb Detection K-9 Section. A jury also awarded him $13 million.

“It’s not a tactic to say we’re going to play hardball. It’s just stupid,” McNicholas said. “I am frustrated because she goes and blames my clients and runaway juries for her problems.”

Greg Smith, another plaintiffs’ attorney, said he has also noticed a tendency at Feldstein Soto’s office to push cases to trial.

“Everything is a fight,” Smith said. “I have been suing the city for 30 years, and this has been the worst administration with respect to trying to settle cases.”

Feldstein Soto said her office settles “every case we can.”

“It’s in nobody’s interest to go to trial. It’s a waste of resources,” she said. “But we will not settle cases where we don’t think we’re liable or where the demand is unreasonable.”

To stem the flood of large payouts, Feldstein Soto is looking to Sacramento for help, proposing a bill that would cap lawsuits against California cities at $1 million or three times the economic losses caused by an incident, whichever is greater. Caps on damages exist already in 38 states, according to Feldstein Soto’s office.

She has yet to find a state legislator to sponsor the bill.