What would it mean for an algorithm to experience color, sound, pain? There's no need to bring souls into it. That's a religious straw man. We know we do experience the world through sensory sensations, and those also make up our thoughts, memories and dreams. What we don't know is how our understanding of the physical world can possibly create those sensations, since we model the world as abstract mathematical patterns that don't experience sensation.
I'm not talking about souls! What the heck is that anyways. Yes, I'm talking about the fact that our understanding of how physical systems work (neurons and all that) give us no understanding of why we need to experience things. We could have worked just fine without it (again, see the hard problem of consciousness). So I assert that AI would function perfectly just fine without subjective feeling as well, and we would't know it because there's no way to establish it. However, we would fail the mirror test: it looks like us, behaves like us, hence it feels like us, but it's just a quality imitation.
I believe it is not possible to imitate a human without the imitation being so complex as to experience reality itself. Your argument is basically the Chinese Room experiment, in which my view is that the whole room is conscious.
