The development of AI large models is reshaping the innovation model driven by technology-push and demand-pull, making the interaction mechanisms between the two more closely integrated. However, existing literature lacks a systematic discussion on the innovation process driven by the interaction between demand and technology under the influence of AI large models. For this reason, a case study of AI large model-empowered innovation in the Tmall Genie product was conducted, based on the perspectives of the technology track and market track. The pathways for technology-push, demand-pull, and dual-track interactive innovation enabled by AI large models were extracted. The findings indicate that (1) traditional AI technologies contribute to technology-push innovation by participating in stages such as technology identification, market validation, and testing, while also embedding in demand-pull innovation through stages like user need acquisition, evaluation, and transformation, facilitating the discovery and realization of personalized demands; (2) AI large models enable the synergistic evolution of technology and demand, and support industry upgrading by promoting innovation ideation, technological advancement, bidirectional interaction, iterative innovation, knowledge expansion, and transformation; (3) Compared with the innovation diffusion under the weak coupling mode between technology and demand driven by traditional AI, AI large models, with their significant advantages in expanding “user attributes,” “innovator roles,” and “knowledge domains,” promote innovation diffusion under the strong coupling mode between technology and demand. This study provides theoretical foundations and practical insights for enterprise innovation management and industrial upgrading empowered by AI large models.