The COVID-19 pandemic has led to a surge in telemedicine and mobile health services. In recent years, Artificial Intelligence (AI) has rapidly evolved across multiple domains, revolutionizing the healthcare sector by assisting medical practitioners in disease diagnosis and treatment. This paper aims to elucidate the latest advances and provide a comprehensive analysis of AI in healthcare applications, including smart healthcare wearable devices, telemedicine services, e-healthcare portals, and mobile services. Relevant scholarly articles published in 2015–2024 were extracted from PubMed, IEEE Xplore, ScienceDirect, and Google Scholar database as it includes articles from peer-reviewed journals, conference proceedings and book chapters, focusing on diagnostics, imaging, patient management, security concerns, and AI Applications in healthcare, providing insights into trends, challenges and opportunities. The study highlights several AI approaches, including Machine Learning and Deep Learning, applied to different types of disease diagnosis and treatment in healthcare. This paper summarizes these AI approaches in a tabular format, showing how they assist clinicians in making clinical decisions aiding to improve medical diagnosis. While AI has advanced significantly and is gradually being adopted by healthcare stakeholders, addressing bias in training models, ethical usage of AI and gaining patients’ trust through data privacy and a multifaceted security approach is crucial. The study emphasized adopting AI-powered solutions for enhancing care and improves lifestyles despite challenges. Thus, this paper suggests that by addressing the challenges and capitalizing on the opportunities, AI-powered healthcare technologies will foster patient trust and encourage broad acceptance.