Capitalism inherently causes large wealth gaps, with some people living in poverty while others waste resources that could have helped them. For capitalism to be a stable system, there needs to be something that solves this contradiction, and currently, a large part of the solution is individualist ideology. You can be fine with fellow humans living on the street if you believe everyone is in the end only responsible for themselves.

Furthermore, the good sides of individualism contradict the interests of capital, like strict hierarchies versus the value of individual expression. Here we can see how material interests are stronger than ideology. Liberals should as individualists believe in a person's right to freedom from police violence, but it can easily be justified with simple dehumanization. They should believe in freedom of gender expression and sexuality, but those can be opposed by being obsessed with children's "safety", because they are not yet full persons so the freedom of the individual does not extend to them.

So individualism is not bad in and of itself, but it is currently a tool of capitalist order, and also not very useful as a tool for liberation under capitalism.