Artificial intelligence as an idea has existed for thousands of years, but its significant development began only in the 1950s. The use of artificial intelligence in everyday and business life is increasing. Taking into account the importance of the application of artificial intelligence in today's business, this paper intended to investigate its application and challenges in small and medium-sized enterprises in the Republic of Croatia. The purpose of the paper is to show the reasons and ways of applying artificial intelligence in the operations of companies in the Republic of Croatia. The subject of the work is the implementation of artificial intelligence in the operations of Croatian small and medium-sized enterprises. The goal of the research was, based on a survey of 90 small and medium-sized companies from the Republic of Croatia, to determine the importance of applying artificial intelligence in business operations, that is, what are the possibilities of such technology. The secondary goal was to determine the level of satisfaction of companies that have integrated the use of artificial intelligence into their operations. This was intended to answer the question of whether the company considers that the use of artificial intelligence is justified and profitable in its operations. The research results showed that all selected companies apply at least one form of artificial intelligence in their operations. The biggest benefit of implementing artificial intelligence in business is reflected in the saving of time and resources, i.e. the improvement of production or service processes