Nvidia may not need to price compete immediately, but if LLMs drive demand for more capable consumer hardware they can either:

(1) make a whole lot of money fulfilling that demand, or

(2) leave an unmet demand that makes it more attractive for someone else to spend the money to field a solution.

(1) seems an attractive choice even if it wasn’t for the potential threat of (2).

It wasn't ML but gaming that drove the demand for GPUs, and ML sort of rode in the slipstream (same for crypto). Later demand for crypto hashing drove GPU sales as much as gaming but that is now over. So unless either (1) ML by itself can present a demand as large as either crypto or gaming or (2) Crypto or gaming can provide a similar demand as they've done in the past the economies of scale that drove this will likely not be reached again. If they do however the cost of compute will come down drastically and that in turn may well drive another round of advances in models for the larger players.

>but if LLMs drive demand for more capable consumer hardware they can either:

That's a big if. I imagine people who will buy GPUs to run LLMs locally are either researchers or programmers. I am imagine most consumer focused solutions will be cloud first. That is a much smaller market than gamers and nvidia wouldn't want to cannibalize their datacenter offerings by releasing something cheaper. It's far better for them to sell high tier GPUs to Amazon and let them "rent" it out to researchers and programmers.