Based on data from Chinese A-share listed firms from 2012 to 2023, this study constructs a technology spillover model incorporating firms’ chain-position factors to investigate the impact of artificial intelligence (AI) application by core firms on the distribution of markup ratios along the supply chain. The empirical results show that AI application by core firms generates bilateral spillover effects along the supply chain, with the spillover effect being more pronounced for upstream firms. Incorporating chain-position factors into the model weakens this effect. Further analysis reveals that AI spillover effects shift the distribution of markup ratios along the supply chain from divergence toward convergence, manifesting as a greater enhancement of markup ratios for upstream firms. Heterogeneity analysis indicates that the spillover effect is more prominent when upstream and downstream firms belong to high-tech industries, are larger in scale, or have a smaller technological gap with the core firm. At the level of markup distribution, AI amplifies the influence of technological capability differences on profit distribution, driving upstream profits toward top firms while disrupting the “larger firms always dominate” pattern of markup distribution downstream.