Right now, everyone is commenting that AI has trouble identifying images and using that failure as an all-encompassing example.

This is just starting so its completely understandable for they to have issues like the one you mention. It doesn't mean anything in the long run.

The fact that machines have gotten so good at recognizing things like faces should be worrying.

Yes, that technology could easily be used to bad things, but that's the way any technology is, they can be used for good or bad things.

AI could wipe out humanity. It could send self replicating probes to planets everywhere and it’s strategy would likely be better than anything a single human could come up with.

Yes, they could. Since you mentioned Musk I suppose you are also aware that he believes we must eventually merge with machines in order to survive long term. So even if the AIs end up being better, we could still survive and improve ourselves thanks to them.

This century is going to be one of big changes mate!