Just thinking out-loud here: AI probably would be able to understand and create art (not necessarily human) only if its 'brain' as complex as ours. But (!) once it gets to that point, it would become 'alive' in certain sense. That means it would have as much right to be an artist as any human. And consequently it won't be replacing human artists but will be standing right next to them.
If it's not completely human-like in brain, body and perception, the AI's art would have to be most likely alien.
Of course, unless Mankind comes with a sudden breakthrough, we're a loooooooooooong way from creating any synthetic lifeforms. I mean, we can't quite replicate even the eye and image processing at this point, though some progress was made. Still it requires very powerful hardware and/or a lot of time. Artist are safe from any sort of alien competition for at least a lifetime =D