Nvidia was propelled into becoming a titan of the hardware industry by the frenzy in the AI market. However, an unstable market driven by a speculative bubble is not a sound foundation. We can get an idea of what Nvidia can expect going forward by looking at what happened with Cisco during the dot-com bubble.

Cisco thrived as the backbone of the internet revolution, supplying networking equipment to a wave of startups and tech companies. But when the bubble burst, the contradictions of capitalism came crashing down. Overproduction led to a glut of hardware, bankrupt startups flooded the market with second-hand equipment, and demand for new hardware evaporated. Cisco quickly went from being a star to a company facing serious financial troubles.

Nvidia finds itself in a rather similar position today. The AI boom created a massive demand for GPUs, with VC funded companies investing billions into hardware. All of a sudden, DeepSeek disrupted both the need for Nvidia’s hardware the whole AI as a service business model. When the bubble bursts, the market will be flooded with second-hand GPUs, driving down demand and undermining Nvidia’s core business.

This is the essence of capitalist contradiction: the system’s drive for endless expansion leads to overproduction, while its reliance on speculative markets ensures that demand is inherently unstable. Both Nvidia’s dependence on high-risk AI startups and Cisco’s reliance on dot-com companies illustrate how pursuit of profit creates fragile ecosystems that are vulnerable to sudden collapses.

The broader implications for the industry are equally damning. Companies that have invested heavily in expensive GPUs may pivot to new paradigms, leaving Nvidia with reduced relevance in a transformed market. Nvidia’s current valuation, inflated by AI hype, could face a sharp correction as growth slows and the second-hand market undercuts new sales. Other players in the AI hardware ecosystem, dependent on Nvidia’s dominance, could also face fallout, further destabilizing the industry.

This scenario isn’t an isolated case of one company’s potential decline, it’s a microcosm of capitalism’s inherent flaws. The system’s reliance on speculative booms, its tendency toward overproduction, and its inability to plan for long-term stability ensure that crises become inevitabilities. Nvidia’s trajectory, like Cisco’s before it, is a product of a system that prioritizes profit over sustainability, and short-term gains over collective well-being.

The cycles of overproduction and collapse will continue as long as the pursuit of profit remains the driving force of economic activity. The only way to break free is by building a new system based on rational planning, collective ownership, and the prioritization of human needs. Until then, the crashes will keep coming, and the working class will continue to pay the price.