Microscopes are an essential optical instrument for diagnostic purposes. Now, AI is included in these diagnostic processes with microscopes which has revolutionized this area of field. Diagnostic processes have become more accurate, efficient and less time consuming for pathologists and patients as well. This paper provides a detailed review of artificial intelligence (AI) enabled microscopy for diagnostic applications. Latest advancements in AI enabled microscopes are discussed, focusing on their applications in medical diagnostics. The review come up with a range of microscopy techniques and how AI algorithms help in real-time image analysis, recognition of abnormalities, and disease prediction. Moreover, challenges and opportunities associated with these smart microscopes are also determined. The purpose of this paper is to serve as a valuable resource for researchers, clinicians, and technologists who are working on AI-enabled microscope designs for diagnostic applications.