I guess I think of AI as fancy language for learning from your mistakes. In that case, google ought to be learning at a record rate right now.
I think the biggest problem with google right now is that they have departed too far from on-page signals. We see it most clearly in the long tails, as Tedster pointed out. Their obsession with spam has caused them to throw out the baby with the bathwater. I think it is time for google to get back to basics.