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The video takes this paper out of context to argue that LLMs are fatally flawed. The paper merely establishes a complexity bound based on the floating point operations a model is capable of beyond which they begin guessing. AFAICT all that it demonstrates is that LLMs do not defy our theories of computation (e.g. P != NP).
Will LLMs only ever be "tools?" idk. Are LLMs sold as more than tools? Certainly. Does this paper prove LLMs will only ever be tools? No.
Sadly, I don't think the youtuber knows what they are talking about.
It's generally about AI, not AGI specifically. His point is the hype exceeds reality, and that AI will never progress past mathematical limitations that were discovered by computer scientists in the 1960s. Basically, it will never be more than a useful tool.