An AI does not understand anything, it merely simulates the behaviour of an intellect.
That depends what intelligence is: there's no fixed definition.
What AI truly lacks is self-awareness - maybe
volition is a useful term, it has no self-directed purpose. However, I do not think this is the same thing as intelligence. It lacks other things as well, but I am not sure they are sufficient to say it is not intelligent.
"Understanding" is a tricky thing. If you ever look at the learning outcomes for a university course for what a passing student should be able to achieve, they very conspicuously do not (or should not!) use the word "understand". How do you measure understanding? For instance, ChatGPT can write higher education essays to a standard that will get a pass, even good marks. So can students also compile words together in a sense that is informationally accurate and makes sense, without ever really "understanding" the topic. How do we discriminate between the ability to memorise a load of information to splurge back at a marker, and actual understanding? We can measure tasks like applying knowledge, evaluating knowledge, using judgement, or synthesis of new information, but none of these are quite the same as "understanding". And an AI can do this stuff too. Not perhaps through the same processes and mechanisms as human thought, but they can do it.
If we look at animal studies, we can see that all sorts of different creatures have forms of intelligence. Crows, dogs, octopuses, etc. But their cognitive processes are probably for the most part very different. A crow is in ways an idiot compared to a dog, and yet also vice versa. We could expand this idea to aliens: imagine they arrived in spacecraft above Earth to observe/meet/invade. They would almost certainly not think like us (maybe with exaggerated psychology), like some Star Trek / Star Wars alien. But we would almost certainly have to credit them with being "intelligent". (Frankly, an octopus is probably very "alien", if we really understood how they thought - we might at least assume reasonable level of commonality amongst mammals.)
So, is AI actually "intelligent"? On balance, I would perhaps lean to "yes". But by human standards it is both a genius and an idiot, the latter because it is certainly lacking something.
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