diff --git a/packages/pyright-internal/src/analyzer/protocols.ts b/packages/pyright-internal/src/analyzer/protocols.ts
index 1f139894a3d4..76c0fb3b36a6 100644
--- a/packages/pyright-internal/src/analyzer/protocols.ts
+++ b/packages/pyright-internal/src/analyzer/protocols.ts
@@ -9,7 +9,7 @@
  */
 
 import { assert } from '../common/debug';
-import { DiagnosticAddendum } from '../common/diagnostic';
+import { defaultMaxDiagnosticDepth, DiagnosticAddendum } from '../common/diagnostic';
 import { LocAddendum } from '../localization/localize';
 import { assignTypeToTypeVar } from './constraintSolver';
 import { DeclarationType } from './declaration';
@@ -65,7 +65,7 @@ interface ProtocolCompatibility {
 const protocolAssignmentStack: ProtocolAssignmentStackEntry[] = [];
 
 // Maximum number of different types that are cached with a protocol.
-const maxProtocolCompatibilityCacheEntries = 32;
+const maxProtocolCompatibilityCacheEntries = 64;
 
 export function assignClassToProtocol(
     evaluator: TypeEvaluator,
@@ -108,9 +108,13 @@ export function assignClassToProtocol(
             }
 
             // If it's known not to be compatible and the caller hasn't requested
-            // any detailed diagnostic information, we can return false immediately.
-            if (!compatibility && !diag) {
-                return false;
+            // any detailed diagnostic information or we've already exceeded the
+            // depth of diagnostic information that will be displayed, we can
+            // return false immediately.
+            if (!compatibility) {
+                if (!diag || diag.getNestLevel() > defaultMaxDiagnosticDepth) {
+                    return false;
+                }
             }
         }
     }
diff --git a/packages/pyright-internal/src/common/diagnostic.ts b/packages/pyright-internal/src/common/diagnostic.ts
index e236e96ca5f1..fc70920b817b 100644
--- a/packages/pyright-internal/src/common/diagnostic.ts
+++ b/packages/pyright-internal/src/common/diagnostic.ts
@@ -13,8 +13,8 @@ import { DiagnosticLevel } from './configOptions';
 import { Range, TextRange } from './textRange';
 import { Uri } from './uri/uri';
 
-const defaultMaxDepth = 5;
-const defaultMaxLineCount = 8;
+export const defaultMaxDiagnosticDepth = 5;
+export const defaultMaxDiagnosticLineCount = 8;
 const maxRecursionCount = 64;
 
 // Corresponds to the CommentTaskPriority enum at https://devdiv.visualstudio.com/DefaultCollection/DevDiv/_git/VS?path=src/env/shell/PackageFramework/Framework/CommentTaskPriority.cs
@@ -151,6 +151,11 @@ export class DiagnosticAddendum {
     private _messages: string[] = [];
     private _childAddenda: DiagnosticAddendum[] = [];
 
+    // The nest level is accurate only for the common case where all
+    // addendum are created using createAddendum. This is an upper bound.
+    // The actual nest level may be smaller.
+    private _nestLevel: number | undefined;
+
     // Addenda normally don't have their own ranges, but there are cases
     // where we want to track ranges that can influence the range of the
     // diagnostic.
@@ -167,11 +172,12 @@ export class DiagnosticAddendum {
     // Create a new (nested) addendum to which messages can be added.
     createAddendum() {
         const newAddendum = new DiagnosticAddendum();
+        newAddendum._nestLevel = (this._nestLevel ?? 0) + 1;
         this.addAddendum(newAddendum);
         return newAddendum;
     }
 
-    getString(maxDepth = defaultMaxDepth, maxLineCount = defaultMaxLineCount): string {
+    getString(maxDepth = defaultMaxDiagnosticDepth, maxLineCount = defaultMaxDiagnosticLineCount): string {
         let lines = this._getLinesRecursive(maxDepth, maxLineCount);
 
         if (lines.length > maxLineCount) {
@@ -203,6 +209,10 @@ export class DiagnosticAddendum {
         return this._messages;
     }
 
+    getNestLevel() {
+        return this._nestLevel ?? 0;
+    }
+
     // Returns undefined if no range is associated with this addendum
     // or its children. Returns a non-empty range if there is a single range
     // associated.