Yes it is a bubble and will pop. Yes it can be done sustainably. I literally have a local LLM made by Alibaba (Qwen) that runs on my laptop NPU and is still pretty useful for Linux debugging. Now it's made to be the like normal chatbot shit which is dumb, but it works. If you took a similar sized model and trained it specifically to be a helper for a specific distro (like train it on Arch Wiki and not on like all the other random shit they train it on) then it would be quite useful. But the thing is it isn't really profitable the way they think it will be. I'd compare it to like software in general.
I think we should push back on the AI term anyway. That's marketing BS. They are machine learning data processors. Their outputs are determined by their inputs. The viable economic strategy for them is to treat each LLM model more like a piece of software. You purchase X model and it does a specific thing. Or it comes bundled with something else. I think Apple will likely make a local model that runs on their Macs as a tech support helper at some point. And it'll just be trained on like all the issues that come up with the Mac and can download updates where if 1 person has an issue it'll update and suddenly all the machines will know about that issue. Or like how Photoshop has the "AI" tools that auto fill images and crop things for you.
Those are genuinely useful and don't take a data center to run.
What has basically happened is tech companies put spellcheck on crack out there as AI and are now trying to convince the world it can be the next stage of human civilization. When in reality it's best used as what it is. Spellcheck but for other things. You remember how back 10 years ago you had that thing where your phone would reccomend the next word for you to type and you'd click one of 3 or 4 options? That was an LLM. The tech isn't new. They just decided to pump so much data and energy and compute into it that it became sentient and it didn't work. So now they're trying to convince everyone it DID work so they don't go broke.