The role of artificial intelligence (AI) in the digital transformation era's educational landscape and its impact on student achievement has grown in recent years. The proposed study will examine the application of AI-based learning tools by students enrolled in institutions of higher learning and the degree to which these learning tools can affect their performance in terms of efficiency and engagement in learning and overall academic performance. A quantitative and empirical method was used to gather data on 310 students spread across the state of Karnataka using a structured questionnaire. The analysis has used statistical packages such as Pearson correlation, regression and ANOVA to analyse correlation between awareness, adoption, usefulness and ethical issues and institutional support. Research shows that students' academic achievement is positively correlated with their familiarity with and use of AI technologies. Perceived usefulness was a significant factor in determining learning involvement and challenges and ethical issues were observed to be interconnected with each other, and the introduction of AI in the responsible way is a necessity. Also, the institutional support proved to be one of the major predictors of the entrepreneurial success of students in AI-driven ventures. The research finds that AI does not only improve learning experience and interaction, but also innovation and academic performance, assuming the accessibility, ethics, and institutional facilitation is well-handled.