Android Studio compiles old icon

In Android Studio 3.6 I was also facing the same problem. I just restarted my phone and every thing was fine. I hope that you just have to restart your phone.

I don't know what is the exact problem (Android Studio even showed the correct icon in the preview despite the app having the incorrect icon) but I resolved it by copying the same icon under a different name and changing the Manifest accordingly.

I had the same problem in Android Studio. All that was required was selecting Build -> Clean Project from the menu and then build again. After that, the correct icon appeared in the compiled APK file.