Artificial Intelligence (AI) is revolutionizing customer personalization by delivering highly tailored experiences through advanced algorithms and data analysis. This paper explores the transformative impact of AI on personalizing customer interactions, examining key technologies such as machine learning, natural language processing, and predictive analytics. It highlights the benefits of AI-driven personalization, including enhanced engagement, improved customer satisfaction, and increased conversion rates. Challenges such as data privacy, ethical considerations, and integration complexities are also discussed, alongside best practices for effective implementation. Future trends, including hyper personalization and AI integration with augmented reality, are explored to provide insights into emerging opportunities and innovations. By addressing both the potential and challenges of AI in personalization, this study offers a comprehensive overview of how businesses can leverage AI to optimize customer interactions and drive long-term success.