$Microsoft(MSFT.US) The stock price of Swedish 🇸🇪 Ericsson rose 1000-fold from 1988 to 2000. After the dot-com bubble burst, the stock price fell by 99%.

In the 1990s, the narrative in the capital markets was:

Ericsson = the "builder of the world's nervous system" in the Internet era.

Throughout the 1990s, everyone believed that "the Internet would reshape the entire world."

By the late 1990s, the market had formed a consensus that almost no one doubted:

Everyone would be online

All communications would be digitized

Data traffic would grow exponentially

Mobile communications would become ubiquitous worldwide

And Ericsson, Nokia, Lucent, and Cisco were the four companies responsible for building the infrastructure.

The core logic of the market at that time was also simple: whoever controlled the communication network equipment,

controlled the lifeline of the information age.

The narrative was also grand: the network was the future power system, bandwidth was the future energy, and communication equipment vendors were the new era's infrastructure giants.

Ericsson was believed to be far more than just selling equipment; it was continuously building the underlying system of human civilization.

A typical mainstream view back then was that data traffic would explode, bandwidth would never be enough, networks had to be continuously expanded, and base stations had to be continuously built.

The market also believed: Communication demand = exponential function

Therefore, it was deduced: Network equipment revenue = exponential function.

What happened later?

The speed of the real world always lags behind the narrative.

Demand did grow, but not as fast as predicted.

The Internet did change the world, but adoption has its own rhythm, cycles, and friction.

Technological progress actually reduced unit costs. Because equipment efficiency improved, compression technology advanced, and network utilization increased. The same demand required less and less hardware.

Due to high profits in the early stages, industry competition became extremely fierce, capacity expanded too quickly, and companies could only lower prices to utilize fixed costs.

Profit margins were continuously compressed.

Ultimately, a simple and brutal result emerged: Capacity > Demand

And in the infrastructure industry, once utilization rates decline:

The capital return model collapses, the valuation system resets, and stock prices plummet.