This is correct at the firm level and breaks down at the aggregate level, which is where it gets interesting.

At the firm level, automating away labor costs is obviously rational. But capital in aggregate can't actually rid itself of labor, since labor is where surplus value comes from. A fully automated economy would be insanely productive and generate basically no profit. So the capitalist class pursuing this logic collectively is, without knowing it, pursuing the dissolution of the system that makes them the capitalist class.

You don't have to buy any of that to notice the more immediate mechanism though: AI doesn't need to actually replace workers to discipline them. The credible threat of replacement is enough to suppress wages, justify restructuring, and extract more from whoever's left. That's already happening and requires no AGI.