Not sure what topic to put this under. It’s not a real bug, but more a situation that confuses the analysis algorithm.
Simply running Photo AI on the photo creates a patch of blurred hair in the beard. Appears if only sharpening, or only remove noise or both are chosen.
It looks like Face Recovery may be on. Can you try turning it off and see if that makes a difference? Face Recovery works best on smaller faces and it’s possibly causing this behavior.