But only if you ignore all the other market participants, right? How can we ever reach a point where all the i.e. smaller Chinese competitors perpetually trailing behind SOTA with a ~9 month lag but at a tiny fraction of the cost stop existing?

I mean we just have to look at old discussions about Uber for the exact same arguments. Uber, after all these years, still is at a negative 10 % lifetime ROI , and that company doesn't even have to meaningfully invest in hardware.

IMO this will probably develop like the railroad boom in the first half of the 19th century: All the AI-only first movers like OpenAI and Anthropic will go bust, just like most railroad companies who laid the tracks, because they can't escape the training treadmill. But the tech itself will stay, and even become a meaningful productivity booster over the next decades.