I can't say that you are wrong, you might be right, especially about AGI. And I think it's unlikely that LLMs are the direct path to AGI. But, just looking at how human brains work, it seems unlikely that we would be intelligent either if we used your same reductionist logic.
An individual neuron doesn't "think" or "understand" anything. It's a biological cell that simply fires an electrochemical signal when its input threshold is met. It has no understanding of language or context. By your logic, since the fundamental components are just simple signal processors, the brain cannot possibly learn or be intelligent. Yet, from the complex interaction of ~86 billion of these simple biochemical machines, the emergent properties of thought, understanding, and consciousness arise.
Dismissing an LLM's capabilities because its underlying operations are basically just math operating on tokenized data is like dismissing human consciousness because it's "just electrochemistry" in a network of cells. Both arguments mistake the low-level mechanism for the high-level emergent phenomenon.