Isn't it because AM audio is still understandable under very suboptimal conditions where digital might not get through? Digital narrowband data modes tend to pass very small amounts of data
Quite the opposite. For short messages digital modes can employ layers of redundancy, auto carrier recovery, error correction at all layers all while yielding lower power requirements, and longer distance.
FAA actually tried moving to digital voice (has benefits wrt airband congestion) but it didn't go anywhere. I believe a lot came down to the minimal benefit over current solutions, plus the coordination and safety implications of actually making the switch. Tough for an FAA official to pull the trigger on a rollout that has even 0.1% chance of an aircraft crashing.