Re: the error is in call it "AI" !!!
I totally agree but it is seemly impossible to get academics, business, governments, media and the world from using "AI". Today's so-called AI is not what McCarthy was describing with term in 1956. It is, as you say, Machine Learning and we should expect this "learning" to be very lumpy. We should also take a look at the rise of statistics and probability theory in the 19th and early 20th centuries. Many of the difficulties ML is generating, including the hype and myth, were first generated over a century ago. ML has automated these analytical methods which of course adds another turn of the screw.
Hopefully the second wave of AI hype is beginning to subside and we can sensibly investigate the potential and limitations of the technology. I do have my doubts about this as there is too much invested in the myth of AI.