VS Code Issue with Absolute Path

What I am trying to achieve is to create absolute path aliases in webpack to simplify importing modules.

The code work as expected in Stackblitz web container
https://stackblitz.com/edit/stackblitz-webcontainer-api-starter-u9g2us?file=package.json,src%2FApp.jsx,webpack%2Fwebpack.common.js

But locally in vscode the code work aswell on webpack dev server, but vscode doesn't seem to realize the paths, I have no idea what's wrong? is it intellisense issue in vscode or what?

Any help would be appreciated
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