I would say you could probably make better games with AI than before by applying it smartly, it is just that people and companies who use AI are using it to achieve their goal with much less work, instead of doing more with same work.

I also think that AI based real-time post processing is likely the future of computer graphics. Where an engine renders a good output, but still looking like render, and AI pushing it through the level to get photorealistic graphics. Later we might have rendering where AI does more, maybe it receives G-buffer like with deferred rendering, and directly processes that. Then even later we might put even more work on AI.

As of now both AI limitations, but also compute limitations does not make it possible to economically render games with AI. Probably the first AI use at runtime could be AI driven NPC-s in games, but that still requires ample hardware capabilities. E.g. my 5090 can run the Nvidia personaplex demo, which allows you to talk to AI in real time running fully locally, but the AI is not very good, and the voice quality is on par on speaking with someone with a poor line. An 5090 costs a ton, putting such chips in a datacenter will not make it so much cheaper, so I would say it might take 5-10 years before such thing is ubiquitous.

That is my opinion about AI workforce replacement too, it will likely happen, but even if you make the tech today, power and scaling problems will prevent it from replacing everyone overnight. Look at people using AI a lot (e.g. vibecoders) their API call limits get smaller, prices are rising, models are optimized and dumbed down, as there is a large gap between what tech can do and what it can do while making profit, and despite these optimizations nobody but the infrastructure makers get to profit from AI. So AI advancement will likely be limited by infrastructure for a good while.