Most of this is a discussion about semantics, which is silly.
In 99% of industry, AI is used as a synonym for Machine Learning. The remaining 1% refers to Artificial General Intelligence, which is a long term vision for what might be achieved using, again, Machine Learning.
I think a lot of it is ANN based now, but it worked pretty well when it was just KNN. Calling KNN "AI" is pretty cope; it's just a database query. Of course, the large ANN networks are also more or less just a database query refactored as a function transformer, but nobody likes to talk about that.