This is knitting as a method of mass-production. It's not cannibalizing hobby knitters making hats and gloves for their loved ones at Christmas. The comparison to AI music doesn't work because that is trying to occupy the same space as musical artists.
Depends whether you see it as a production method or an art/recreational activity. There can be both, and don't worry, hand-made products will always have a special value. Even if everybody can order custom made knitted sweater from a machine.
Knitting by hand is for fun, with a by product of getting clothes. No one does it to make all their clothes, it’s highly impractical in this day and age.