<p>The growing significance of artificial intelligence (AI) has prompted researchers worldwide to examine its impact across various domains. This study specifically investigates the influence of AI investment on environmental quality using Canada as a case study, considering factors such as biocapacity and economic growth from 2012Q1 to 2022Q4. Through the application of a nonlinear autoregressive distributed lag (N-ARDL) estimator, the findings demonstrate that (i) AI investment contributes to increased CO₂ emissions, indicating that AI correlates with higher CO₂ emissions due to the substantial computational power required by AI technologies, often sourced from non-renewable energy, and vice versa; (ii) fluctuations in economic growth, whether positive or negative, correlate positively with environmental degradation, that is, shocks to economic growth exacerbate environmental degradation, with positive shocks driving up production and consumption, while adverse shocks lead to decreased environmental protection measures. (iii) The expansion of biocapacity was linked to reduced CO₂ emissions in Canada. This study highlights a positive relationship between rising biocapacity and declining CO₂ emissions, emphasising the importance of conservation efforts and sustainable land management practices in enhancing biocapacity and mitigating emissions globally. From a policy standpoint, policymakers should enforce regulations promoting energy-efficient AI development and research while implementing carbon pricing to incentivise cleaner AI practices.</p>