This happens all the time, even without AI. Other researchers or PhD students can publish the same results before you. I say that based on my experience during my PhD.

Yes and no. It's pretty normal for students to get scooped, sometimes even multiple times (ask me how I know...).

It's much less common for students to have their entire thesis direction removed from under them, as might be the case for someone working in fine-grained complexity assuming 3SUM has no subquadratic algorithms, or working assuming ~UGC. Both of which (publicly) seemed like perfectly valid research directions until a couple hours ago.

There might be stuff to salvage from their conditional results anyway, but this is not your average scooping.