It does seem like there is room for an $700-800 9070AI with 32 gb vram.
With a 32GB card well below 1000$ it would sell like candies for anybody doing anything AI-related that's not training (you can easily run inference and fine tuning on such a card).
But it would massively eat in their data center sales which is what executives and investors want to see.
It's a tragedy because such a card would get a lot of love and support from amateurs to make it work great in the ML/AI context and thus improve their data center offerings long term.
So this is gonna end up in the same fashion AMD turns: it will disappoint or be ignored by most gamers cuz it has less brand power and no DLSS, and AMD will still disappoint at the data center level.