Nvidia is flashing a red warning light that should worry every investor who lived through the dot-com era. The company’s inventory has nearly quadrupled in two years—from $5.3 billion in January 2023 to $19.8 billion by October 2025—while accounts receivable has skyrocketed from $4.0 billion to $33.4 billion. These staggering numbers eerily mirror what happened to Cisco just before its catastrophic $2.25 billion inventory write-off in 2001.
The Cisco Playbook: Growth Without Guardrails
In the late 1990s, Cisco was the darling of Wall Street. Revenue exploded from $2 billion in 1995 to $19 billion by 2000, and its stock soared 40 times over. The company boasted a revolutionary “just-in-time” virtual supply chain, which analysts celebrated as the future of manufacturing. But Cisco’s hubris became its fatal flaw.
The company assumed exponential growth would continue forever. Sales forecasts were based purely on internal optimism—no downside scenarios were ever modeled. CEO John Chambers later admitted Cisco had “never built models to anticipate something of this magnitude,” referring to the demand collapse. Rather than slow production when demand weakened in late 2000, the supply chain continued churning. Orders flowed to contract manufacturers, components piled up, and inventory ballooned 300 percent in just one quarter. By Q4 2000, Cisco held $1 billion in hardware sitting idle in warehouses.
When the dot-com bubble burst in 2001, it was too late. Cisco couldn’t scale down its outsourced manufacturing fast enough. The company was left holding $2.25 billion in inventory that couldn’t be resold—much of it customized, obsolete, and destined for the scrap heap. The company’s stock collapsed from $82 to $13, and 8,000 employees lost their jobs.
Nvidia’s Alarming Parallels
Nvidia’s current trajectory mirrors Cisco’s growth phase with striking precision:
| Metric | Cisco (2000) | Nvidia (2025) |
|---|---|---|
| Revenue Growth | ~$2B to $19B (10x) | ~$27B to $57B annually (2x+) nvidianews.nvidia |
| Inventory Buildup | $1B+ sitting in warehouses | $19.8B stockanalysis |
| Receivables Growth | Rising rapidly | Jumped from $10B to $33.4B stockanalysis+1 |
| Customer Base | Concentrated, speculative | AI-dependent: Microsoft, Google, Amazon, Meta |
| Forecasting Model | Growth-only scenarios | Betting entire capacity on AI demand youtube |
The Working Capital Warning
Nvidia’s inventory is growing faster than revenue. According to the latest balance sheet data, accounts receivable more than tripled in one year (from $10 billion in January 2024 to $23 billion by January 2025). This means two dangerous things:
1. Customers Aren’t Paying Immediately: The massive receivables spike suggests extended credit terms—likely to lock in sales. This happened before the Cisco collapse too. Companies give favorable payment terms to customers during boom times, only to face cash crunches when demand evaporates.
2. The Supply Chain is Building Ahead of Confirmed Demand: Like Cisco, Nvidia is ramping manufacturing at the Oracle deal facilities (and others) based on assumptions about future AI spending. If OpenAI’s $300 billion infrastructure bill crumbles, or if AI demand plateaus, Nvidia will be stuck with Gigawatt-scale data centers sitting idle and inventory piling up.
Why Nvidia Isn’t Completely Doomed (Yet)
There is one crucial difference: Unlike Cisco in 2000, Nvidia actually has real, validated demand with diversified customers. Microsoft, Google, Amazon, and Meta aren’t startups betting the farm on speculative infrastructure. They’re trillion-dollar companies with deep pockets. Nvidia’s gross margins exceed 70%, and its net profit margins exceed 50%—vastly superior to Cisco’s measly 15% margins at its peak.
But this advantage only matters if demand doesn’t collapse. And that’s the elephant in the room: AI is still unproven as a mass-market profit engine.
The Red Flags
- Inventory growing faster than revenue
- Receivables tripling while inventory quadruples
- The entire business bet on a single infrastructure narrative
- Customers (like OpenAI and Oracle) are themselves under financial stress
- The stock price has lost momentum as reality checks in
The Bottom Line
Nvidia is not Cisco yet. But Cisco wasn’t Cisco yet either—until it suddenly was. The warning signs are there: bloated inventory, skyrocketing receivables, and an entire supply chain geared for a future that may not materialize.
If AI spending slows even modestly, Nvidia could face the choice that haunted Cisco: either cut production immediately and disappoint customers, or keep the factories running and write down billions. History suggests it will choose poorly.