The role of artificial intelligence (AI) in achieving sustainability goals has garnered attention in academic literature. While AI has been argued to be crucial in addressing circularity challenges, organizations face challenges in configuring a business model. Designing new business calls for insights on how AI can be integrated into value creation and capture mechanisms. There is a lack of clarity on how organizations deploy AI as they transition to circular business model innovation. The purpose of the study is to explore how AI is integrated into organizational processes while adopting circular business models. We conducted online open-ended interviews with 55 participants to explore the potential role of AI in enabling the adoption of circular business models. Our findings have implications for theory building relating to AI business model innovation and provide a novel avenue for further research on business model innovation literature. Building on a natural resource-based view, the findings indicate that while implementing a circular business model is challenging, AI enables organizations to create, transfer, and capture value through resource efficiency and the reuse of resources. As AI technologies continue to evolve, organizations must develop adaptive capabilities to continually explore opportunities. AI enables organizations to reduce costs, develop novel value-creation strategies, and capture opportunities, resulting in improved efficiency. Transitioning to a circular business model requires developing routines, and organizations must adapt existing systems to ensure these systems result in pollution prevention, product stewardship, and sustainable development. It is important for managers to develop organizational resources and capabilities that enable the development of AI capabilities.