That's not a doomsday scenario for Nvidia. There is essentially infinite demand for better AI, only limited by what can be provided at acceptable cost. If you can run GPT-4 on a macbook, you can do even better with a more massive model. If you can run a good image model on a macbook, then the next frontier is running a good video model, etc.
The real doomsday scenario for Nvidia is that there seems to very little differentiating their hardware. Their lead in the space exists because they developed good software support early, which lead to everyone standardizing on them. But AI is not like graphics where the problem domain is complex and the APIs are very ill-defined, and you can do all these tricks to make it faster and better. Instead, AI is almost entirely doing just a handful of very simple operations. Other vendors should be capable of providing good software support eventually, and at that point, what is Nvidia's moat? What justifies their margin?