Despite growing integration of artificial intelligence (AI) in business models, research on its impact on corporate climate change exposure remains scarce. By examining AI-related innovations in US-listed firms from 2001 to 2019, we present compelling evidence that AI innovation can effectively mitigate firms' climate change exposure. Specifically, AI reduces firms' exposure to regulatory and physical climate change risks through improved carbon management efficiency, with computer vision and control & planning as the most effective AI types in addressing climate change exposure. Our findings are particularly pronounced for firms in the mature stage of their life cycle and those facing higher regulatory intervention. Our results withstand rigorous tests addressing endogeneity concerns. Our study offers strong support for firms adopting AI innovation to achieve carbon neutrality, contributing to the ongoing discourse surrounding the trade-offs of AI. Our findings offer valuable insights for stakeholders developing climate risk mitigation strategies. learn more on SSRN