Recently, the proposal to use voltage amplification from ferroelectric negative capacitance (NC) to reduce the power dissipation in nanoelectronic devices has attracted significant attention. Homogeneous Landau theory predicts, that by connecting a ferroelectric in series with a dielectric capacitor, a hysteresis-free NC state can be stabilized in the ferroelectric below a critical film thickness. However, there is a strong discrepancy between experimental results and the current theory. Here, we present a comprehensive revision of the theory of NC stabilization with respect to scaling of material and device dimensions based on multi-domain Ginzburg–Landau theory. It is shown that the use of a metal layer in between the ferroelectric and the dielectric will inherently destabilize NC due to domain formation. However, even without this metal layer, domain formation can reduce the critical ferroelectric thickness considerably, limiting not only the range of NC stabilization, but also the maximum amplification attainable. To overcome these obstacles, the downscaling of lateral device dimensions is proposed as a way to prevent domain formation and to enhance the voltage amplification due to NC. These insights will be crucial for future NC device design and scaling towards nanoscale dimensions.