Digital transformation has become very crucial in global market. Digital technologies have revolutionized the way industries operate, introducing the concept of “Industry 4.0” or the “smart factory”. Digital technologies have substantially transformed the business and society, bringing fundamental changes through the new emerging approaches of the circular and sharing economy. Artificial intelligence (AI) is now become an essential part in the manufacturing industry to enhance the performance and boost the demand and productivity in the manufacturing firms. However, there are some barriers and challenges face by the manufacturing firms in implementing the AI due to the infancy stage of AI in Malaysia such as lack of talent, lack of incentive and innovation. Therefore, the purpose of this study is to identify the barriers and challenges in implementing AI. In this paper, managers from the manufacturing companies were selected as respondents based on Federal Manufacturing Malaysia Directory. The questionnaires are distributed to the respondents by using the online survey. A total of 93 questionnaires was collected with feedback rate, 23.3%. Descriptive analysis is used to identify the barriers and challenges. The highest level for barriers of AI is lack of talent. The highest level for challenges is no experts in company. This research provide input for manufacturing companies to improve the barriers and challenges for future improvement in implementing AI.