Artificial Intelligence (AI) is now the driving force behind the creation of autonomous systems, transforming transportation and air technology with autonomous vehicles and drones.[1] This paper describes the central role AI plays in making such systems sense their surroundings, make decisions, and act with minimal human involvement. Although there have been impressive strides, AIbased autonomous systems are confronted with major challenges, such as sensor trust, real-time decision-making, safety, and ethics. This paper addresses these challenges and analyses state-of-the-art solutions, such as sophisticated machine learning algorithms, sensor fusion methods, and resilient decision-making paradigms. Based on a detailed analysis, the paper tries to present a scientific understanding of existing limitations and offer recommendations on breakthrough means to transform the safety, efficiency, and scalability of drones and autonomous vehicles. The results highlight the necessity of further R&D in order to overcome these complexities and more stable and secure AIbased autonomous systems to be launches.