> People instead focus on understanding, because history has taught us that understanding tough problems in mathematics finds natural applications elsewhere.

If the goal is still eventually the applications elsewhere, we're back to what happens if the AI is simply better at this.

You can probably make an argument that human understanding is better as humans are better at finding new patterns or fundamental new ways of thinking and also applying them to new applications.

However, what if AI becomes better at humans for that as well?

No reason you couldn't have an AI be optimised for advancing basic research and understanding and a second AI to take these results and optimise for finding new applications for these discoveries.

Basic research is funded with the understanding that applications are not imminent, yes, but also with the expectation that some of the knowledge gained will eventually result in advancements to the public welfare