> Once that happens, whomever is left standing can dial back the training investment to whatever their share of inference can bear.

Or, if there's two people left standing, they may compete with each other on price rather than performance and each end up with cloud compute's margins.

Sure, but they will still need to dial it back to a point where they can fund it out of inference at some point. The point is that the fact they can't do that now is irrelevant - it's a game of chicken at the moment, and that might kill some of them, but the game won't last forever.