Yeah, AI is pretty generic: simple pathing algorithms in games are called AI.
The “AI” being hyped a lot at the moment falls in the subgroup called Machine Learning (or ML) for short, which excludes algorithms (so something like the A* pathing algorithm is AI but not ML) and isn’t even all that young (I learned Neural Networks back at Uni about 3 decades ago).
It’s just that computing power, the advances over time in the algorithms in Neural Networks and the use of massive datasets (LLM stands for Large Language Model) have brought us over a threshold were ML can produce output in text, imagery and audio good enough to usually deceive the average person, hence all the hype which is being backfitted to hype just about all kinds of AI, even the algorithmic stuff.