It's...not, and its repeatedly been proven in practice that this is an invalid generalization because it is missing necessary qualifications, and its funny that this myth keeps persisting.
It's probably a bad idea to use uncurated output from another AI to train a model if you are trying to make a better model rather than a distillation of the first model, and its definitely (and, ISTR, the actual research result from which the false generalization has developed) a bad idea to iteratively fine-tune a model on its own unfiltered output, but there has been lots of success using AI models to generate data which is curated and used to train other models, which can be much more efficient that trying to create new material without AI once you've gotten to the point where you've already hoovered up all the readily-accessible low hanging fruit of premade content relevant to your training goal.