Artificial Intelligence (AI) is increasingly transforming the educational landscape by enabling students to access information, generate content, and enhance learning efficiency through tools such as ChatGPT and Google Gemini. While AI offers significant academic support, it also raises concerns related to over-dependence, academic integrity, and critical thinking skills. With the rapid global growth of AI, it is important to examine its penetration among students in less developed regions such as the North Andhra region, India. The present study aims to assess the level of awareness, patterns of utilization, and perceptions of AI among undergraduate students in this region, focusing on academic usage and ethical considerations. A descriptive survey was conducted among approximately 350 undergraduate students (aged 17–18 years) using a structured questionnaire covering AI awareness, usage patterns, ethical perceptions, and training needs. The sample included a significant proportion of rural students (63.43%), providing insights into AI adoption in less developed contexts. Data were analyzed using percentage and frequency methods. The results indicate a high level of awareness and frequent use of AI tools among students, with platforms like ChatGPT being the most commonly used. AI is primarily utilized for understanding concepts and saving time in academic work. However, the findings also reveal concerns regarding over-dependence, instances of direct use of AI-generated content without modification, and limited clarity about academic ethics and plagiarism. The study concludes that while AI has become an integral part of students' academic activities, there is a significant need for structured guidance and training to promote its responsible and ethical use, highlighting the importance of integrating AI literacy and ethical guidelines into higher education practices.