This study explores the transformative role of Artificial Intelligence (AI) in enhancing customer experience personalization (CEP) and optimizing marketing strategies (MSO) within digital marketing environments. Grounded in the Technology Acceptance Model (TAM), the research incorporates ethical and privacy concerns (EC) as moderating factors influencing AI adoption and its effectiveness. Using survey data from marketing professionals across diverse industries, the study employs Structural Equation Modeling (SEM) to analyze complex relationships among AI use, CEP, MSO, and marketing outcomes. The findings reveal that AI significantly improves customer engagement and marketing performance by enabling tailored interactions, data-driven segmentation, and campaign optimization. Moreover, ethical and privacy concerns positively moderate these effects, underscoring the necessity of responsible AI practices in sustaining consumer trust and regulatory compliance. By offering empirical insights into the interplay between AI, personalization, strategy, and ethics, this study contributes to both theoretical development and practical guidance for businesses navigating digital transformation. The research highlights AI’s strategic potential in creating sustainable competitive advantage while advocating for ethical safeguards in technology-driven marketing.