> Silicon Valley is clearly responding to massive demand for AI services > to provide services that people and companies want so badly

Not at all. In economics, demand has little to do with "wants", it means paying the price to buy the service. In that light, there isn't much demand for AI because the companies providing it are losing huge sums of money to subsidize underpriced and mostly free services.

The AI "demand" is now paid for by circular deals and huge debts incurred for the sake of centrally planned subsides - in confirmation of the comment you're trying to refute.

> They’re selling hardware that companies are demanding in large quantities because those companies need the hardware

Those companies don't need the hardware for funded demand (which isn't there), they need it to scalp the hardware market by hoarding and centralizing compute, while suppressing possible competitors - another centrally planned activity lacking any wider economic benefits.

PS. There's another big mistake in this expression "hardware that companies are demanding in large quantities" - the demands increase the price but they don't increase the quantity, because all relevant fabs are running at full capacity, they literally cannot provide more.