I think the UK has been heading this way for a while -- before AI. Its not been the size of the institutions that has changed, but the "elite" universities tend to give students more individual attention. A number of them (not just Oxford and Cambridge) have tutorial systems where a lot of learning is done in a small group (usually two or three students). They have always done this.

At the other extreme are universities offering low quality courses that are definitely degree factories. They tend to have a strong vocational focus but nonetheless they are not effective in improving employability. In the last few decades we have expanded the university system and there are far more of these.

There is no clear cutoff and a lot of variation in between so its not a bifurcation but the quality vs factory difference is there.