In the new era of digital economy governance, artificial intelligence (AI) empowers the development of new quality productivity forces of the CPA industry and the revolution of technical audit service capabilities, which becomes an imperative engine for improving the practice quality of audit firms. However, the existing research on the effect of AI application has rarely paid attention to the evidence on the demand for audit labor skills. The progress of AI technology has a significant impact on the transformation of the demand for audit labor service, which could present a double-sided effect. Viewed through the risk effect arising from the shock of AI application, the application of AI may potentially trigger a high uncertainty and business risk, which require the accounting information verification institutions to have a better capabilities of technical audit service. This progression could promote the transformation and upgrading of firms′ demand for technical audit service, and facilitate the relationship between AI application and the demand for technical audit service to become a complementary mechanism. However, from the perspective of the dividend effect of technology progress, AI application can effectively promote the transformation and upgrading of corporate governance and the modernization of governance capability, and the optimization of corporate governance driven by AI could have a substitution effect on the governance mechanism of matching technology audit service, which could probably reduce the essential demand of firms’ technical audit service. Therefore, based on the hypothesis of the risk effect or dividend effect of AI technology progress, could the application of AI promote the demand for technical audit service?Taking Chinese A-share listed firms from 2011 to 2021 as the research samples, this paper explores the impact of firms’ AI application on the demand for audit labor service from the perspective of information technology (IT) auditors. The empirical result shows that the application of AI has significantly increased the firms’ demand for technical audit service, which supports the risk management hypothesis of AI application. The influence mechanism indicates that the growing requirements of technical risk management brought by the intelligent transformation of firms is a crucial channel of firms’AI application on the demand for technical audit service. Furthermore, the heterogeneity analysis shows that the effect of demand for technical audit service of AI application is more pronounced in the firms with high business complexity and high-tech attribute. Finally, considering the underlying economic consequence of the demand for technical audit service, the expected demand for technical audit service influenced by AI application can enhance the adequacy of AI-related critical audit matters risk disclosure. This paper concludes that the firms could display a more technology-oriented competence for audit service in order to actively respond to the variation of technical risk environment under the shock of the AI technology progress, which can effectively expedite the transformation and upgrading of labor skills service demand in the audit market by virtue of AI application, and play a precise role in audit value insurance for the risk control of firms’ intelligent business matters. This study has significant theoretical contributions and policy implications. First, based on the theory of skill-biased technological change, this paper enriches the growing body of research on the economic consequence of the advancement of AI technology from the risk management of the demand for technical audit labor service, and provides a thoughtful insight for the transformation and upgrading of the audit service function under the empowerment of AI and the development of new quality productivity forces in audit firms. Second, integrating the new audit demand environment driven by the advancement of AI technology, this paper expands the research on the demand effect of high-quality audit service to the individual service of IT auditors with more technical proprietary knowledge, and offers an empirical reference for the investigation on the shifts in the demand for technical audit service within the audit market labor and the digital transformation of human capital management in audit firms. Third, this study establishes an empirical path to investigate the impact of the change of AI technology environment on the risk disclosure of critical audit matters in new audit reports by specifying the governance of the demand for technical audit service. It also validates the effectiveness of regulatory mechanisms in technology audit services by examining the risk disclosure of critical audit matters in digital intelligent businesses, and thereby enriches the research on audit risk control mechanisms of AI application. Meanwhile, the conclusions of this paper has an important value in evaluating the effectiveness of CPAs’ technical practice and cultivating digital audit management capabilities in the advancement of AI technology.