The transition towards circular supply chains is imperative for achieving sustainable development, especially in emerging economies where resource constraints and environmental challenges are pronounced. This study identifies how Artificial Intelligence (AI) capabilities can act as enablers for enhancing circularity across supply chain processes in such contexts. Artificial Intelligence (AI) that has led to improvize transparency, traceability, adopting an innovative business model, etc. In order to assess the disruptive action of AI, the current study has adopted the Best–Worst-Method (BWM) approach for measuring the role of disruptive AI capabilities in the circularity of the firms. This study is pioneer in employing the BWM approach for evaluating the AI capabilities and identifying the most preferred outcome. The results from BWM show that circular product design is the effective AI capability that acts as the most impactful enabler to enhance the circular performance outcomes of the firms, followed by the innovative circular business model. The study concludes with a strategic framework for policymakers and managers to harness AI for circular economy goals, emphasizing the need for capacity building, data infrastructure, and supportive governance mechanisms.