<p>Digital transformation has become a strategic priority for organizations seeking to enhance HR capabilities, particularly through the integration of artificial intelligence (AI) and knowledge-driven systems. However, the mechanisms through which digital transformation translates into HR digital competencies remain underexplored in emerging markets. This study investigates these relationships within technology-intensive organizations in Egypt, where digital systems and AI tools are already embedded in operational structures. Using structural equation modeling based on survey data from 300 HR professionals working in technology firms, IT service providers, and software development companies, the study examines the interactions between HR digital transformation, AI implementation, knowledge management practices, and the development of HR digital competencies. The findings show that AI exerts the strongest direct influence on HR digital competency, while knowledge management functions as a significant mediator translating digital transformation and AI adoption into capability development (p &lt; 0.001). The proposed model demonstrates high explanatory power (R² = 0.880), confirming that digital transformation initiatives generate synergistic effects when supported by both AI integration and knowledge-focused processes. The study contributes to digital transformation literature by highlighting a distinct “accelerated under constraint” pathway of capability development in emerging markets and establishing theoretical boundary conditions for technology-driven HR transformation in digitally advanced organizational environments. Future research should extend this model to non-technology sectors to assess sectoral differences in digital readiness and adoption dynamics.</p>