Built on unearned hype.
This might be the case ‘in the industry’, but I would argue quite strongly that it represents a gross misuse of the word ‘intelligence’. Like a fun new definition of the word, that doesn’t mean anything close to what it usually means.
The colloquial use of “AI” is basically the Hollywood concept of a conscious computer. Nobody knows about AI as it’s used in computer science industry. Nor does it matter in regular discourse. In this sense it’s not AI. It’s a disservice to lead the on laypeople to believe it’s something it’s not.
Words often have multiple meanings in different contexts. “Intelligence” is one of those words.
Another meaning of “Intelligence” is “the collection of information of military or political value.” Would you go up to CIA headquarters and try to argue with them that “the collection of information of military or political value” lacks understanding, and therefore they’re using the wrong word and should take the “I” out of their name?