Semiconductors...
By themselves can only perform a few basic electronic functions. However the term seems to be magnified to something much greater.
I believe behind the curtain is one or more super-computers with access to quintillions of storage RAM packed with bytes from books and anything else scanned into it by a bunch of people. I imagine the AI performs indexing (maybe like the Dewey Decimal system) for quick retrieval.
The speech recognition program is marvelous, as well as grammatical tailoring software is marvelous, and a few random twists which mimic human tendencies...
We see a lot of money being made from AI, some from real results, but also from the hype generated to build up our fascination about it. There's an expression 'Deus ex machina' which sums up our mixture of hope and fear that humans can create technology so 'magical' that it surpasses all human potential. The result might be used to enhance mankind or degrade it.