The development of Artificial Intelligence (AI) technology has brought significant changes in digital marketing strategies, allowing businesses to increase efficiency, personalization, and market reach. This research aims to identify forms of AI use in digital marketing, analyse implementation challenges, and explore opportunities that can be maximized by business actors, mainly digital MSMEs in the city of Palembang. Using a descriptive qualitative approach, data were collected through literature studies and semi-structured interviews with business actors and digital marketing practitioners. The results show that AI has been utilized in various forms, such as chatbots, product recommendation systems, targeted advertising, predictive analytics, and content automation. However, its implementation still faces challenges, including low technology literacy, limited human resources, infrastructure costs, and data privacy issues. On the other hand, tremendous opportunities are opening up through personalizing consumer experience, operational efficiency, data-driven product development, and expanding the global digital market. This research is expected to make a theoretical contribution to the development of technology-based marketing literature and become a practical reference for business actors in utilizing AI strategically and sustainably.