This issue due to visual studio recent upgrade, so to overcome either downgrade your version or select the Lightning Web Component OR Aura Component Folder from left side instead of the single file.

Proposal is a LWC Bundle with contain Proposal.html, Proposal.js and proposal.js-meta.xml

Select the Proposal Folder instead of deploying the single file

SfdxError: You must specify the Aura bundle folder, not an individual component.

This also impacts Lightning aura and breaks the convenient ‘AutoSave on focus change’, ‘deploy on save’ .

VS Code Version: 1.38.0

SFDX CLI Version: 7.23.1-ced0ec4940

Solution:

• Downgrading to version 7.8 of the sfdx-cli works fine. Upgrading to 7.23 and you have the error.
• Use to deploy from LWC Folder (From left side source)