Rejecting clients when you have enough is a sound business decision. Some clients are too annoying to serve. Some clients don't want to pay. Sometimes you have more work than you can do... It is easy to think when things are bad that you must take any and all clients (and when things are bad enough you might be forced to), but that is not a good plan and to be avoided. You should be choosing your clients. It is very powerful when you can afford to tell someone I don't need your business.
Sure, but it seems here that they are rejecting everything related to AI, which is probably not a smart business move, as they also remark, since this year was much harder for them.
The fact is, a lot of new business is getting done in this field, with or without them. If they want to take the "high road", so be it, but they should be prepared to accepts the consequences of worse revenues.