They obviously do, they just aren’t perfect at it. You can get the LLM to display (simulations of agents displaying) quite clear logical thinking in certain scenarios. For example linguistic IQ tests. Gwern has written extensively about this.

There is a general issue where AIs fail in different ways than humans, and the failures look really dumb to a human. So humans tend to ascribe that dumbness from the human scale. Instead, I’d suggest they just have a dramatically different spider-graph of capabilities to a human, and are overall more capable than the “dumb spreadsheet / parrot” narrative admits. (Definitely not human-level IQ yet, to be clear.)