Abstract: Based on the annual reports of Chinese A-share listed companies, this paper uses machine learning technology to identify the list of AI listed companies, and reveals the general characteristics of China′ s AI innovation diffusion: (1) The diffusion of AI technology innovation in China showed an inflection point in 2016 and 2017; (2) There is head effect in the application of AI technology in China, and intelligent security has become the most popular industry. Secondly, this paper analyzes the factors influencing the diffusion of AI technology. Then the paper constructs the panel data from 2015 to 2019, and makes empirical analysis using the panel probit model. The results show that the impact of firm size on innovation diffusion is inverted U-shaped. Firm′s R & D capability has no significant effect. Competitive market structure and government subsidy can promote innovation diffusion. AI technology has network externalities. The positive mechanism of government subsidies and other relevant policies lies in reducing firm′s technology conversion costs, promoting listed companies to form new market expectations, and leading to a positive feedback cycle of technology application. As China′s economy enters a stage of high-quality development, it is necessary for policies related to AI to shift from industrial policy to competition policy, and give full play to the decisive role of the market in resource allocation.