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As artificial intelligence (AI) transforms society preparing educators to teach with and about AI in equity-centered ways is critical. This qualitative study examines how 21 preservice teachers (PSTs) developed critical awareness of AI’s implications for equity through an equity-focused AI module. Thematic analysis of PSTs’ written reflections showed PSTs shifted from uncertainty to recognizing AI’s potential to support learner variability and agency. They identified strategies for using AI to differentiate instruction for underserved learners while acknowledging risks such as access and algorithmic bias. Moving beyond viewing AI as a productivity tool, PSTs began to see AI literacy as essential for students across disciplines. Findings underscore the importance of embedding critical AI literacy in teacher preparation to advance educational equity.