UPDATE, September 9: Added link to Chiang's novella, The Lifecycle of Software Objects, which is included in his book Exhalation.
Can AI create art? Ted Chiang is quite possibly the best qualified person in the world to answer this question, being both a technical writer for Microsoft and also an acclaimed literary writer, whose incredibly thought-provoking and moving science fiction stories transcend the genre. (One of his stories is the basis of the great 2017 movie Arrival.)
In the New Yorker, Ted Chiang has an incredibly succinct way of explaining that, no, AI in itself probably can't create art:
Art is notoriously hard to define, and so are the differences between good art and bad art. But let me offer a generalization: art is something that results from making a lot of choices. This might be easiest to explain if we use fiction writing as an example. When you are writing fiction, you are—consciously or unconsciously—making a choice about almost every word you type; to oversimplify, we can imagine that a ten-thousand-word short story requires something on the order of ten thousand choices. When you give a generative-A.I. program a prompt, you are making very few choices; if you supply a hundred-word prompt, you have made on the order of a hundred choices.
If an A.I. generates a ten-thousand-word story based on your prompt, it has to fill in for all of the choices that you are not making. There are various ways it can do this. One is to take an average of the choices that other writers have made, as represented by text found on the Internet; that average is equivalent to the least interesting choices possible, which is why A.I.-generated text is often really bland. Another is to instruct the program to engage in style mimicry, emulating the choices made by a specific writer, which produces a highly derivative story. In neither case is it creating interesting art.
Chiang allows that there might be enough creator-driven intentionality and choice for a human artist to leverage AI into actual works of art -- I'd cite Nettrice Gaskins here, for visual art -- but if it's a matter of making an AI prompt more and more (and more) detailed, you might as well skip ChatGPT and just write the goddamn story yourself.
Speaking of Chiang, his 2010 novella The Lifecycle of Software Objects (link below) is a brilliant if disturbing weave of virtual world avatars and AI: