I mean, so does a spell checker, or a calculator, or a videogame character, etc. The term 'AI' is tossed around a lot, to the point that it's not really distinct from computing in general. The connotation is that sentience distinguishes it from other flavors of 0's and 1's following whatever logic they're designed to do; but as you mentioned that's not really how it's used. It bugs me though, cuz if and when we develop the sentient variety, it's going to be a MAJOR turning point for humanity (good or bad) in par with harnessing fire or electricity... but it'll be lost on most people cuz they'll think "we've had this for years now..." cuz of LLM chat bots n' shit.