This paper aims to examine the importance of Artificial intelligence (AI) in fostering Economic Diversification by utilizing the Global AI Index for the former. Meanwhile, for the later, the Economic Diversification Index and its sub-indices, namely: Revenue Diversification, Output Diversification, and Trade Diversification were used for a cross-sectional sample of 47 countries. The results demonstrated a significant positive relationship between AI and Economic Diversification in general, and Output and Trade diversification in specific. This triggered further investigation to how policy makers could nurture AI to stimulate higher Trade and Output diversification. The results showed that in drafting AI policies for the aim of higher trade and output diversification, the main focus should be directed towards AI related Talent, the operating environment, and Research & Development in AI.