Artificial Intelligence (AI) has emerged as a transformative force in marketing, reshaping how businesses approach customer segmentation and personalization. Traditional segmentation methods, grounded in demographic and psychographic variables, often fail to capture the dynamic complexity of consumer behavior in digital environments. AI introduces advanced analytical capabilities that enable organizations to process vast amounts of structured and unstructured data, uncover latent patterns, and deliver hyper‑personalized experiences at scale. This paper examines the theoretical foundations of segmentation, the AI models that drive personalization, and practical applications across industries such as e‑commerce, finance, healthcare, and entertainment. Case studies of leading firms including Amazon, Netflix, and Spotify illustrate the tangible impact of AI‑driven personalization on customer engagement and business performance. The manuscript also explores the strategic business value of AI, highlighting improvements in customer satisfaction, loyalty, and operational efficiency. At the same time, it addresses challenges related to data privacy, algorithmic bias, and ethical implications, emphasizing the need for transparency and fairness in AI deployment. Future directions point toward explainable AI, real‑time personalization, and cross‑channel integration as critical pathways for sustainable and responsible innovation. By adopting ethical practices and aligning AI initiatives with customer‑centric strategies, businesses can harness AI to build trust, achieve competitive advantage, and drive long‑term growth.