I am having the same problem after upgrading to macOS 26.1.
The Sorting for the People&Pets album now seems to be fixed as "Oldest first". when I try to rearrange the People by dragging them into an alphabetic order, the list will automatically be rearranged by the date I have named the face. It is impossible to find a person this way. I have to use the search field.
I am only having 846 named people and Pets right now. It used to be a lot more, but quite a few did not survive the upgrade.
I suspect the developer team does not expect us to name so many different people, only the closest friends and family, but I am using the People album to name the photos of people I am only meeting occasionally, so I can remember what they are called, before I meet them again. And so I need a People album for more than thousand different people, not just the pictures of friends and family. Friends and family I can recognize in a photo again without having to add names.