We're getting one step further but they're still missing out. Articifial intelligence or consciousness have no reason to be precluded by a lack of embodiment. Computers can have sensors and that's all that's needed. Some life forms have sensors very different from ours and that most probably doesn't prevent them from being intelligent or even maybe conscious.

What a lack of human embodiement prevents in AI is strong communication with humans. Why ? Because as Lakoff hinted on, they'll lack grasp on the linguistic twists and metaphors that make our language relate to our everyday experiences. The problem will be similar to the problem we would have trying to communicate with a bird or an insect. We don't ground our communication in the same things at all.