Why invest millions in AI tools that agents can replicate?

One thing I’m struggling to understand in the current AI startup hype:

A lot of YC-backed or heavily funded AI startups get copied insanely fast once the idea becomes visible. Within months, you often see:
- open-source alternatives
- AI agents replicating workflows
- cheaper clones
- wrapper products everywhere

The moat feels weak because distribution and UX are often the only defensible layers, while the underlying models become commoditized very quickly.

Meanwhile, deep-tech physical consumer products seem much harder to copy at scale because they require:
- supply chains
- manufacturing
- logistics
- certifications
- hardware iteration
- operational execution

So I wonder if VCs are currently over-allocating toward AI software and underestimating physical-world innovation.

AI definitely has value, but does every AI workflow startup deserve massive valuations when replication speed is becoming near-instant?

Curious to hear counterarguments from builders/investors here.