Some firms have successfully harnessed artificial intelligence (AI) to create unparalleled wealth, while most around them have failed to do so. This managerial challenge has led to recent calls for research to answer the question of how firms can use AI to create and appropriate economic value. This paper answers that question. The paper reviews the existing research and discusses its merits. This review highlights the need for subsequent conceptual reconfigurations of business model theory, the theory of data network effects, and the theory of situated AI for competitive advantage. The integration of these three theories leads to a novel theory: AI-enabled business models for competitive advantage. This paper contributes to the broad literature on technology management, and more specifically to literature on technology-enabled business models and the use of AI. Several important managerial implications are outlined to help firms ensure successful