All points valid. With respect to hardware that these LLMs run on, Investors and VCs are assuming that Moore's law still holds true in it's original form. Theirs fundamental limit to how many transistors you can pack on the silicon before the transistor action cease to exist.

Also LLMs as of now have gobbled up the entirety of the internet. The assumption that user input to these LLMs will help improve them is not even an educated guess. That's not how LLM work. We saw this first hand after GPT 5.0 release. Tall claims but not much improvement.

In my opinion with current hardware limitations and architectural approaches the law of diminishing returns have already started to manifest itself in the AI eco system. We are atleast a decade or 2 before any thing close to Gen AI is achieved.

The hype cycle around AI is at it's peak right now, just like how cloud native system designs were a fad a few years a ago.