That's actually a fair point; I hadn't considered the actual rate of growth in detail.

Edit: There is also an additional facet: If we are to assume that the AI in question is simply an AI designed to create superior AI, and this does indeed cyclically reproduce, then if you were to restrict it to its computational power, it would still run more efficiently than humans by such a large margin. It takes roughly 12 watts to run a human brain power-wise, and if a computer has access to enormously larger amounts of energy, then it is not unthinkable that a machine would be able to self-enhance to an insane degree. Sure, there may be logarithmically declining returns to a certain extent as exists with virtually any system, but the difference between a human and a machine that is at the point of diminishing returns would remain unimaginably wide. Humans were not designed to think; we were designed to be energy-efficient decent thinkers. A machine that can evolve at a million-times faster pace who is designed purely to think will inevitably pass us by a very long margin, even if the nature of acceleration belies an exponential growth function. The main caveat is that creating an AI that can produce superior AI relative to itself for the same intention of creating superior AI is incredibly difficult.