This study investigated the impact of AI-powered personalized learning tools on the academic performance and perceptions of pre-service student teachers enrolled in the Educational Technology course, a compulsory component of the Professional Postgraduate Diploma in Teaching program at Ajman University. A quasi-experimental design was employed with 55 students in the experimental group and 55 in the control group. The experimental group utilized AI-powered tools within the Moodle platform, while the control group received traditional instruction. Pre- and post-tests, along with a rubric-based assessment and a questionnaire, were administered to assess performance, knowledge retention, critical thinking, motivation, and engagement. Statistical analysis revealed significant differences between the groups, favoring the experimental group in terms of academic performance and knowledge retention. Additionally, students in the experimental group demonstrated higher levels of critical thinking, motivation, and engagement. These findings underscore the transformative potential of AI-powered personalized learning tools in teacher education. By integrating AI into educational practices, institutions can revolutionize e-learning by providing personalized instruction, intelligent tutoring, automated grading, and adaptive learning experiences. This can enhance student engagement, improve learning outcomes, and reduce the workload of educators. Ultimately, AI empowers institutions to create more effective and inclusive learning environments that cater to the diverse needs of students and prepare them for the future.