diff --git a/code/core/src/cli/globalSettings.ts b/code/core/src/cli/globalSettings.ts
index 935944795daa..6dcc016e92ba 100644
--- a/code/core/src/cli/globalSettings.ts
+++ b/code/core/src/cli/globalSettings.ts
@@ -29,7 +29,7 @@ const userSettingSchema = z.object({
       items: z
         .object({
           accessibilityTests: statusValue,
-          aiPrepare: statusValue,
+          aiSetup: statusValue,
           autodocs: statusValue,
           ciTests: statusValue,
           controls: statusValue,
diff --git a/code/core/src/core-events/index.ts b/code/core/src/core-events/index.ts
index 8126f8a158ea..b988a366256d 100644
--- a/code/core/src/core-events/index.ts
+++ b/code/core/src/core-events/index.ts
@@ -91,9 +91,9 @@ enum events {
   // Story discovery and testing flow
   GHOST_STORIES_REQUEST = 'ghostStoriesRequest',
   GHOST_STORIES_RESPONSE = 'ghostStoriesResponse',
-  // AI analytics - ai prepare command
-  AI_PREPARE_ANALYTICS_RESPONSE = 'aiPrepareAnalyticsResponse',
-  AI_PREPARE_ANALYTICS_REQUEST = 'aiPrepareAnalyticsRequest',
+  // AI analytics - ai setup command
+  AI_SETUP_ANALYTICS_RESPONSE = 'aiSetupAnalyticsResponse',
+  AI_SETUP_ANALYTICS_REQUEST = 'aiSetupAnalyticsRequest',
   // Open a file in the code editor
   OPEN_IN_EDITOR_REQUEST = 'openInEditorRequest',
   OPEN_IN_EDITOR_RESPONSE = 'openInEditorResponse',
@@ -173,8 +173,8 @@ export const {
   ARGTYPES_INFO_RESPONSE,
   GHOST_STORIES_REQUEST,
   GHOST_STORIES_RESPONSE,
-  AI_PREPARE_ANALYTICS_RESPONSE,
-  AI_PREPARE_ANALYTICS_REQUEST,
+  AI_SETUP_ANALYTICS_RESPONSE,
+  AI_SETUP_ANALYTICS_REQUEST,
   OPEN_IN_EDITOR_REQUEST,
   OPEN_IN_EDITOR_RESPONSE,
   MANAGER_INERT_ATTRIBUTE_CHANGED,
diff --git a/code/core/src/core-server/presets/common-preset.ts b/code/core/src/core-server/presets/common-preset.ts
index b534317e022e..d4fded28c652 100644
--- a/code/core/src/core-server/presets/common-preset.ts
+++ b/code/core/src/core-server/presets/common-preset.ts
@@ -41,7 +41,7 @@ import { initializeSaveStory } from '../utils/save-story/save-story.ts';
 import { parseStaticDir } from '../utils/server-statics.ts';
 import { type OptionsWithRequiredCache, initializeWhatsNew } from '../utils/whats-new.ts';
 import { getWsToken } from './wsToken.ts';
-import { initAIAnalyticsChannel } from '../server-channel/ai-prepare-channel.ts';
+import { initAIAnalyticsChannel } from '../server-channel/ai-setup-channel.ts';
 
 const interpolate = (string: string, data: Record<string, string> = {}) =>
   Object.entries(data).reduce((acc, [k, v]) => acc.replace(new RegExp(`%${k}%`, 'g'), v), string);
diff --git a/code/core/src/core-server/server-channel/ai-prepare-channel.ts b/code/core/src/core-server/server-channel/ai-setup-channel.ts
similarity index 76%
rename from code/core/src/core-server/server-channel/ai-prepare-channel.ts
rename to code/core/src/core-server/server-channel/ai-setup-channel.ts
index 0c08fed0f8d4..f5a45f9b1667 100644
--- a/code/core/src/core-server/server-channel/ai-prepare-channel.ts
+++ b/code/core/src/core-server/server-channel/ai-setup-channel.ts
@@ -1,12 +1,12 @@
 import type { Channel } from 'storybook/internal/channels';
 import {
-  AI_PREPARE_ANALYTICS_REQUEST,
-  AI_PREPARE_ANALYTICS_RESPONSE,
+  AI_SETUP_ANALYTICS_REQUEST,
+  AI_SETUP_ANALYTICS_RESPONSE,
 } from 'storybook/internal/core-events';
 import {
   getLastEvents,
   getStorybookMetadata,
-  isStoryCreatedByAIPrepare,
+  isStoryCreatedByAISetup,
   telemetry,
 } from 'storybook/internal/telemetry';
 import type { CoreConfig, Options } from 'storybook/internal/types';
@@ -26,8 +26,8 @@ export function initAIAnalyticsChannel(
     return channel;
   }
 
-  /** Send analytics about the ai prepare workflow when requested*/
-  channel.on(AI_PREPARE_ANALYTICS_REQUEST, async () => {
+  /** Send analytics about the ai setup workflow when requested*/
+  channel.on(AI_SETUP_ANALYTICS_REQUEST, async () => {
     const stats: {
       fileCount?: number;
       storyCount?: number;
@@ -36,16 +36,16 @@ export function initAIAnalyticsChannel(
 
     try {
       const lastEvents = await getLastEvents();
-      const lastAIPrepare = lastEvents?.['ai-prepare'];
-      const lastPrepareStoryScoringRun = lastEvents?.['ai-prepare-story-scoring'];
+      const lastAISetup = lastEvents?.['ai-setup'];
+      const lastSetupStoryScoringRun = lastEvents?.['ai-setup-story-scoring'];
 
-      // Only run if sb ai prepare has been called
-      if (!lastAIPrepare) {
+      // Only run if sb ai setup has been called
+      if (!lastAISetup) {
         return;
       }
 
       // Already ran once for this project — never run again
-      if (lastPrepareStoryScoringRun) {
+      if (lastSetupStoryScoringRun) {
         return;
       }
 
@@ -66,7 +66,7 @@ export function initAIAnalyticsChannel(
       // disturb end user activities.
       const isIdle = await waitForIdleVitest();
       if (!isIdle) {
-        logger.debug('AI_PREPARE_ANALYTICS_REQUEST timed out waiting for vitest to be available.');
+        logger.debug('AI_SETUP_ANALYTICS_REQUEST timed out waiting for vitest to be available.');
         return;
       }
 
@@ -74,7 +74,7 @@ export function initAIAnalyticsChannel(
       const generatorPromise = getStoryIndexGeneratorPromise?.();
       if (!generatorPromise) {
         logger.debug(
-          'AI_PREPARE_ANALYTICS_REQUEST could not proceed as the index generator is not ready.'
+          'AI_SETUP_ANALYTICS_REQUEST could not proceed as the index generator is not ready.'
         );
         return;
       }
@@ -82,14 +82,14 @@ export function initAIAnalyticsChannel(
       const generator = await generatorPromise;
       const indexAndStats = await generator.getIndexAndStats();
       if (!indexAndStats) {
-        logger.debug('AI_PREPARE_ANALYTICS_REQUEST could not proceed as the index is not ready.');
+        logger.debug('AI_SETUP_ANALYTICS_REQUEST could not proceed as the index is not ready.');
         return;
       }
 
       const aiStoryFiles = new Set<string>();
       let aiStoryCount = 0;
       for (const entry of Object.values(indexAndStats.storyIndex.entries)) {
-        if (isStoryCreatedByAIPrepare(entry)) {
+        if (isStoryCreatedByAISetup(entry)) {
           aiStoryFiles.add(entry.importPath);
           aiStoryCount++;
         }
@@ -97,7 +97,7 @@ export function initAIAnalyticsChannel(
 
       if (aiStoryFiles.size > 0) {
         const aiTestRunResult = await runGhostStories([...aiStoryFiles]);
-        telemetry('ai-prepare-story-scoring', {
+        telemetry('ai-setup-story-scoring', {
           stats: {
             fileCount: aiStoryFiles.size,
             storyCount: aiStoryCount,
@@ -107,7 +107,7 @@ export function initAIAnalyticsChannel(
           ...(aiTestRunResult.runError ? { runError: aiTestRunResult.runError } : {}),
         });
       } else {
-        telemetry('ai-prepare-story-scoring', {
+        telemetry('ai-setup-story-scoring', {
           stats: {
             fileCount: 0,
             storyCount: 0,
@@ -117,13 +117,13 @@ export function initAIAnalyticsChannel(
         });
       }
     } catch {
-      telemetry('ai-prepare-story-scoring', {
+      telemetry('ai-setup-story-scoring', {
         stats,
         runError: 'Unknown error during AI story scoring',
       });
     } finally {
       // we don't currently do anything with this, but will be useful in the future
-      channel.emit(AI_PREPARE_ANALYTICS_RESPONSE);
+      channel.emit(AI_SETUP_ANALYTICS_RESPONSE);
     }
   });
 
diff --git a/code/core/src/core-server/server-channel/ghost-stories-channel.ts b/code/core/src/core-server/server-channel/ghost-stories-channel.ts
index e09f574b6eb9..157d0144990c 100644
--- a/code/core/src/core-server/server-channel/ghost-stories-channel.ts
+++ b/code/core/src/core-server/server-channel/ghost-stories-channel.ts
@@ -38,11 +38,11 @@ export function initGhostStoriesChannel(
       const ghostRunStart = Date.now();
       const lastEvents = await getLastEvents();
       const lastInit = lastEvents?.init;
-      const lastAIPrepare = lastEvents?.['ai-prepare'];
+      const lastAISetup = lastEvents?.['ai-setup'];
       const lastGhostStoriesRun = lastEvents?.['ghost-stories'];
 
-      // We only want to run ghost stories immediately after init or ai prepare.
-      const lastRelevantEvent = lastAIPrepare ?? lastInit;
+      // We only want to run ghost stories immediately after init or ai setup.
+      const lastRelevantEvent = lastAISetup ?? lastInit;
       if (!lastRelevantEvent) {
         return;
       }
@@ -53,7 +53,7 @@ export function initGhostStoriesChannel(
       }
 
       const sessionId = await getSessionId();
-      // We only capture ghost stories in the first ever session since init or ai prepare.
+      // We only capture ghost stories in the first ever session since init or ai setup.
       if (lastRelevantEvent.body?.sessionId && lastRelevantEvent.body.sessionId !== sessionId) {
         return;
       }
diff --git a/code/core/src/core-server/utils/checklist.test.ts b/code/core/src/core-server/utils/checklist.test.ts
index 72dcb363e990..c961d83c5828 100644
--- a/code/core/src/core-server/utils/checklist.test.ts
+++ b/code/core/src/core-server/utils/checklist.test.ts
@@ -69,7 +69,7 @@ describe('initializeChecklist', () => {
     } as unknown as Awaited<ReturnType<typeof globalSettings>>);
   });
 
-  it('keeps aiPrepare as open when no ai-prepare event exists in cache', async () => {
+  it('keeps aiSetup as open when no ai-setup event exists in cache', async () => {
     const { get: getEventCacheEntry } = await import('../../telemetry/event-cache.ts');
     vi.mocked(getEventCacheEntry).mockResolvedValue(undefined);
 
@@ -77,41 +77,41 @@ describe('initializeChecklist', () => {
     await initializeChecklist();
 
     const state = mockStore.getState();
-    expect(state.items.aiPrepare.status).toBe('open');
+    expect(state.items.aiSetup.status).toBe('open');
   });
 
-  it('marks aiPrepare as done when ai-prepare event exists in cache', async () => {
+  it('marks aiSetup as done when ai-setup event exists in cache', async () => {
     const { get: getEventCacheEntry } = await import('../../telemetry/event-cache.ts');
     vi.mocked(getEventCacheEntry).mockResolvedValue({
       timestamp: Date.now(),
-      body: { eventType: 'ai-prepare' } as TelemetryEvent,
+      body: { eventType: 'ai-setup' } as TelemetryEvent,
     } satisfies CacheEntry);
 
     const { initializeChecklist } = await import('./checklist.ts');
     await initializeChecklist();
 
     const state = mockStore.getState();
-    expect(state.items.aiPrepare.status).toBe('done');
+    expect(state.items.aiSetup.status).toBe('done');
   });
 
-  it('does not overwrite aiPrepare status if already done from persisted state', async () => {
-    // Simulate persisted user state where aiPrepare is already 'skipped'
+  it('does not overwrite aiSetup status if already done from persisted state', async () => {
+    // Simulate persisted user state where aiSetup is already 'skipped'
     mockSettingsValue.checklist = {
-      items: { aiPrepare: { status: 'skipped' } },
+      items: { aiSetup: { status: 'skipped' } },
       widget: {},
     };
 
     const { get: getEventCacheEntry } = await import('../../telemetry/event-cache.ts');
     vi.mocked(getEventCacheEntry).mockResolvedValue({
       timestamp: Date.now(),
-      body: { eventType: 'ai-prepare' } as TelemetryEvent,
+      body: { eventType: 'ai-setup' } as TelemetryEvent,
     } satisfies CacheEntry);
 
     const { initializeChecklist } = await import('./checklist.ts');
     await initializeChecklist();
 
     const state = mockStore.getState();
-    // The ai-prepare event was found, but status was 'skipped' (not 'open'), so it stays 'skipped'
-    expect(state.items.aiPrepare.status).toBe('skipped');
+    // The ai-setup event was found, but status was 'skipped' (not 'open'), so it stays 'skipped'
+    expect(state.items.aiSetup.status).toBe('skipped');
   });
 });
diff --git a/code/core/src/core-server/utils/checklist.ts b/code/core/src/core-server/utils/checklist.ts
index fbc8fdb9781a..53f939ad5b52 100644
--- a/code/core/src/core-server/utils/checklist.ts
+++ b/code/core/src/core-server/utils/checklist.ts
@@ -63,14 +63,14 @@ export async function initializeChecklist() {
         }) satisfies StoreState
     );
 
-    // Check if ai-prepare has ever been run and mark it as done
-    const aiPrepareEvent = await getEventCacheEntry('ai-prepare');
-    if (aiPrepareEvent) {
+    // Check if ai-setup has ever been run and mark it as done
+    const aiSetupEvent = await getEventCacheEntry('ai-setup');
+    if (aiSetupEvent) {
       const currentState = store.getState();
-      if (currentState.items.aiPrepare?.status === 'open') {
+      if (currentState.items.aiSetup?.status === 'open') {
         store.setState((state) => ({
           ...state,
-          items: { ...state.items, aiPrepare: { ...state.items.aiPrepare, status: 'done' } },
+          items: { ...state.items, aiSetup: { ...state.items.aiSetup, status: 'done' } },
         }));
       }
     }
diff --git a/code/core/src/core-server/utils/doTelemetry.ts b/code/core/src/core-server/utils/doTelemetry.ts
index f1b3374ee2aa..7196568efa08 100644
--- a/code/core/src/core-server/utils/doTelemetry.ts
+++ b/code/core/src/core-server/utils/doTelemetry.ts
@@ -1,5 +1,5 @@
 import {
-  collectAiPrepareEvidence,
+  collectAiSetupEvidence,
   getPrecedingUpgrade,
   telemetry,
 } from 'storybook/internal/telemetry';
@@ -45,7 +45,7 @@ export async function doTelemetry(
     // directly. This is the entry point for collecting evidence about those side effects and
     // recording them in telemetry.
     if (indexAndStats) {
-      collectAiPrepareEvidence('dev', options.configDir, indexAndStats.storyIndex);
+      collectAiSetupEvidence('dev', options.configDir, indexAndStats.storyIndex);
     }
 
     const { versionCheck, versionUpdates } = options;
diff --git a/code/core/src/core-server/withTelemetry.test.ts b/code/core/src/core-server/withTelemetry.test.ts
index 622b9c738738..e39a63ebcef0 100644
--- a/code/core/src/core-server/withTelemetry.test.ts
+++ b/code/core/src/core-server/withTelemetry.test.ts
@@ -4,7 +4,7 @@ import { cache, isCI, loadAllPresets } from 'storybook/internal/common';
 import { prompt } from 'storybook/internal/node-logger';
 import {
   ErrorCollector,
-  collectAiPrepareEvidence,
+  collectAiSetupEvidence,
   oneWayHash,
   telemetry,
 } from 'storybook/internal/telemetry';
@@ -34,7 +34,7 @@ describe('withTelemetry', () => {
     vi.resetAllMocks();
     vi.mocked(ErrorCollector.getErrors).mockReturnValue([]);
     vi.mocked(telemetry).mockResolvedValue(undefined);
-    vi.mocked(collectAiPrepareEvidence).mockResolvedValue(undefined);
+    vi.mocked(collectAiSetupEvidence).mockResolvedValue(undefined);
   });
   it('works in happy path', async () => {
     const run = vi.fn();
@@ -42,7 +42,7 @@ describe('withTelemetry', () => {
     await withTelemetry('dev', { cliOptions }, run);
 
     expect(telemetry).toHaveBeenCalledTimes(1);
-    expect(collectAiPrepareEvidence).toHaveBeenCalledTimes(1);
+    expect(collectAiSetupEvidence).toHaveBeenCalledTimes(1);
     expect(telemetry).toHaveBeenCalledWith('boot', { eventType: 'dev' }, { stripMetadata: true });
   });
 
@@ -52,7 +52,7 @@ describe('withTelemetry', () => {
     await withTelemetry('dev', { cliOptions: { disableTelemetry: true } }, run);
 
     expect(telemetry).toHaveBeenCalledTimes(0);
-    expect(collectAiPrepareEvidence).toHaveBeenCalledTimes(0);
+    expect(collectAiSetupEvidence).toHaveBeenCalledTimes(0);
   });
 
   describe('when command fails', () => {
@@ -67,7 +67,7 @@ describe('withTelemetry', () => {
       ).rejects.toThrow(error);
 
       expect(telemetry).toHaveBeenCalledWith('boot', { eventType: 'dev' }, { stripMetadata: true });
-      expect(collectAiPrepareEvidence).toHaveBeenCalledTimes(1);
+      expect(collectAiSetupEvidence).toHaveBeenCalledTimes(1);
     });
 
     it('does not send boot when cli option is passed', async () => {
@@ -76,7 +76,7 @@ describe('withTelemetry', () => {
       ).rejects.toThrow(error);
 
       expect(telemetry).toHaveBeenCalledTimes(0);
-      expect(collectAiPrepareEvidence).toHaveBeenCalledTimes(0);
+      expect(collectAiSetupEvidence).toHaveBeenCalledTimes(0);
     });
 
     it('sends error message when no options are passed', async () => {
@@ -85,7 +85,7 @@ describe('withTelemetry', () => {
       ).rejects.toThrow(error);
 
       expect(telemetry).toHaveBeenCalledTimes(2);
-      expect(collectAiPrepareEvidence).toHaveBeenCalledTimes(1);
+      expect(collectAiSetupEvidence).toHaveBeenCalledTimes(1);
       expect(telemetry).toHaveBeenCalledWith(
         'error',
         expect.objectContaining({
@@ -149,7 +149,7 @@ describe('withTelemetry', () => {
       ).rejects.toThrow(error);
 
       expect(telemetry).toHaveBeenCalledTimes(0);
-      expect(collectAiPrepareEvidence).toHaveBeenCalledTimes(0);
+      expect(collectAiSetupEvidence).toHaveBeenCalledTimes(0);
       expect(telemetry).not.toHaveBeenCalledWith(
         'error',
         expect.objectContaining({}),
diff --git a/code/core/src/core-server/withTelemetry.ts b/code/core/src/core-server/withTelemetry.ts
index 9903e34fc0a3..81162aaf900c 100644
--- a/code/core/src/core-server/withTelemetry.ts
+++ b/code/core/src/core-server/withTelemetry.ts
@@ -1,7 +1,7 @@
 import { HandledError, cache, isCI, loadAllPresets } from 'storybook/internal/common';
 import { logger, prompt } from 'storybook/internal/node-logger';
 import {
-  collectAiPrepareEvidence,
+  collectAiSetupEvidence,
   ErrorCollector,
   getPrecedingUpgrade,
   oneWayHash,
@@ -189,7 +189,7 @@ export async function withTelemetry<T>(
   if (enableTelemetry) {
     // Fire-and-forget: don't await, don't block the command
     const configDir = options.cliOptions.configDir || options.presetOptions?.configDir;
-    collectAiPrepareEvidence(eventType, configDir);
+    collectAiSetupEvidence(eventType, configDir);
   }
 
   try {
diff --git a/code/core/src/manager/components/sidebar/ChecklistWidget.stories.tsx b/code/core/src/manager/components/sidebar/ChecklistWidget.stories.tsx
index 159204f39ec6..0783b17fe21f 100644
--- a/code/core/src/manager/components/sidebar/ChecklistWidget.stories.tsx
+++ b/code/core/src/manager/components/sidebar/ChecklistWidget.stories.tsx
@@ -95,14 +95,14 @@ export const Narrow = meta.story({
   play,
 });
 
-export const WithAiPrepare = meta.story({
+export const WithAiSetup = meta.story({
   beforeEach: async () => {
     mockStore.setState({
       loaded: true,
       widget: {},
       items: {
         ...initialState.items,
-        // aiPrepare is intentionally left 'open' so it appears in the widget's task list
+        // aiSetup is intentionally left 'open' so it appears in the widget's task list
         controls: { status: 'accepted' },
         renderComponent: { status: 'done' },
       },
diff --git a/code/core/src/manager/components/sidebar/useDelayedAnalyticsTrigger.test.ts b/code/core/src/manager/components/sidebar/useDelayedAnalyticsTrigger.test.ts
index cb10dba6793e..f08f92153bb9 100644
--- a/code/core/src/manager/components/sidebar/useDelayedAnalyticsTrigger.test.ts
+++ b/code/core/src/manager/components/sidebar/useDelayedAnalyticsTrigger.test.ts
@@ -3,7 +3,7 @@ import { renderHook } from '@testing-library/react';
 import { afterEach, beforeEach, describe, expect, it, vi } from 'vitest';
 
 import {
-  AI_PREPARE_ANALYTICS_REQUEST,
+  AI_SETUP_ANALYTICS_REQUEST,
   GHOST_STORIES_REQUEST,
   PREVIEW_INITIALIZED,
 } from 'storybook/internal/core-events';
@@ -66,7 +66,7 @@ describe('useDelayedAnalyticsTrigger', () => {
     expect(api.emit).not.toHaveBeenCalled();
   });
 
-  it('emits GHOST_STORIES_REQUEST and AI_PREPARE_ANALYTICS_REQUEST after delay', () => {
+  it('emits GHOST_STORIES_REQUEST and AI_SETUP_ANALYTICS_REQUEST after delay', () => {
     const api = createMockApi();
     mockUseStorybookApi.mockReturnValue(api as any);
 
@@ -78,7 +78,7 @@ describe('useDelayedAnalyticsTrigger', () => {
     vi.advanceTimersByTime(4 * 60 * 1000);
 
     expect(api.emit).toHaveBeenCalledWith(GHOST_STORIES_REQUEST);
-    expect(api.emit).toHaveBeenCalledWith(AI_PREPARE_ANALYTICS_REQUEST);
+    expect(api.emit).toHaveBeenCalledWith(AI_SETUP_ANALYTICS_REQUEST);
     expect(api.emit).toHaveBeenCalledTimes(2);
   });
 
diff --git a/code/core/src/manager/components/sidebar/useDelayedAnalyticsTrigger.ts b/code/core/src/manager/components/sidebar/useDelayedAnalyticsTrigger.ts
index 9458a5eaf642..d9a16706c275 100644
--- a/code/core/src/manager/components/sidebar/useDelayedAnalyticsTrigger.ts
+++ b/code/core/src/manager/components/sidebar/useDelayedAnalyticsTrigger.ts
@@ -1,7 +1,7 @@
 import { useEffect, useRef } from 'react';
 
 import {
-  AI_PREPARE_ANALYTICS_REQUEST,
+  AI_SETUP_ANALYTICS_REQUEST,
   GHOST_STORIES_REQUEST,
   PREVIEW_INITIALIZED,
 } from 'storybook/internal/core-events';
@@ -33,12 +33,12 @@ export function useDelayedAnalyticsTrigger(): void {
       }
       fired.current = true;
 
-      // if `ai prepare` is in the same session, we run ghost stories and ai prepare analytics.
+      // if `ai setup` is in the same session, we run ghost stories and ai setup analytics.
       if (
-        global.STORYBOOK_LAST_EVENTS?.['ai-prepare']?.body.sessionId === global.STORYBOOK_SESSION_ID
+        global.STORYBOOK_LAST_EVENTS?.['ai-setup']?.body.sessionId === global.STORYBOOK_SESSION_ID
       ) {
         api.emit(GHOST_STORIES_REQUEST);
-        api.emit(AI_PREPARE_ANALYTICS_REQUEST);
+        api.emit(AI_SETUP_ANALYTICS_REQUEST);
       }
     };
 
diff --git a/code/core/src/manager/globals/exports.ts b/code/core/src/manager/globals/exports.ts
index c6df44d8b486..29dc2b59f4f4 100644
--- a/code/core/src/manager/globals/exports.ts
+++ b/code/core/src/manager/globals/exports.ts
@@ -574,9 +574,9 @@ export default {
     'withReset',
   ],
   'storybook/internal/core-events': [
-    'AI_PREPARE_ANALYTICS_REQUEST',
-    'AI_PREPARE_ANALYTICS_RESPONSE',
     'AI_PROMPT_NUDGE',
+    'AI_SETUP_ANALYTICS_REQUEST',
+    'AI_SETUP_ANALYTICS_RESPONSE',
     'ARGTYPES_INFO_REQUEST',
     'ARGTYPES_INFO_RESPONSE',
     'CHANNEL_CREATED',
diff --git a/code/core/src/manager/settings/Checklist/AiSetupBlock.stories.tsx b/code/core/src/manager/settings/Checklist/AiSetupBlock.stories.tsx
index 4baa70c22c60..8cad1b1341d2 100644
--- a/code/core/src/manager/settings/Checklist/AiSetupBlock.stories.tsx
+++ b/code/core/src/manager/settings/Checklist/AiSetupBlock.stories.tsx
@@ -23,14 +23,14 @@ const managerContext: any = {
   },
 };
 
-// Get the raw aiPrepare item. Cast through unknown to avoid deep discriminated-union issues
+// Get the raw aiSetup item. Cast through unknown to avoid deep discriminated-union issues
 // with the as-const typed checklistData — the shape is correct at runtime.
-const rawAiPrepareItem = checklistData.sections
+const rawAiSetupItem = checklistData.sections
   .flatMap((s) => s.items as unknown as ChecklistItem[])
-  .find((item) => item.id === 'aiPrepare')!;
+  .find((item) => item.id === 'aiSetup')!;
 
 const makeItem = (overrides: Partial<ChecklistItem> = {}): ChecklistItem => ({
-  ...rawAiPrepareItem,
+  ...rawAiSetupItem,
   itemIndex: 0,
   sectionId: 'basics',
   sectionIndex: 0,
diff --git a/code/core/src/manager/settings/Checklist/AiSetupBlock.tsx b/code/core/src/manager/settings/Checklist/AiSetupBlock.tsx
index 6d38a3467603..b4f3e3033214 100644
--- a/code/core/src/manager/settings/Checklist/AiSetupBlock.tsx
+++ b/code/core/src/manager/settings/Checklist/AiSetupBlock.tsx
@@ -8,7 +8,7 @@ import { CheckIcon, UndoIcon } from '@storybook/icons';
 import { type API, useStorybookApi } from 'storybook/manager-api';
 import { styled } from 'storybook/theming';
 
-import { AI_PREPARE_PROMPT } from '../../../shared/constants/ai-prompts.ts';
+import { AI_SETUP_PROMPT } from '../../../shared/constants/ai-prompts.ts';
 import { useCopyButton } from '../../../shared/useCopyButton.ts';
 import type { ItemId } from '../../../shared/checklist-store/index.ts';
 import type { ChecklistItem } from '../../components/sidebar/useChecklist.ts';
@@ -61,9 +61,9 @@ const CopyButton = ({ api }: { api: API }) => {
         <CheckIcon /> Copied!
       </>
     ),
-    content: AI_PREPARE_PROMPT,
+    content: AI_SETUP_PROMPT,
     onCopy: () => {
-      api.emit(AI_PROMPT_NUDGE, { id: 'prepare', origin: 'onboarding-guide-page' });
+      api.emit(AI_PROMPT_NUDGE, { id: 'setup', origin: 'onboarding-guide-page' });
     },
   });
 
diff --git a/code/core/src/manager/settings/Checklist/Checklist.stories.tsx b/code/core/src/manager/settings/Checklist/Checklist.stories.tsx
index e19cdb66d033..c4381c950ec0 100644
--- a/code/core/src/manager/settings/Checklist/Checklist.stories.tsx
+++ b/code/core/src/manager/settings/Checklist/Checklist.stories.tsx
@@ -84,27 +84,27 @@ export const Default = meta.story({
   args: { availableItems, ...checklistStore },
 });
 
-export const WithAiPrepare = meta.story({
+export const WithAiSetup = meta.story({
   args: {
     availableItems: buildItems({
       controls: 'accepted',
       renderComponent: 'done',
       whatsNewStorybook10: 'done',
       viewports: 'skipped',
-      // aiPrepare is intentionally omitted → status 'open'
+      // aiSetup is intentionally omitted → status 'open'
     }),
     ...checklistStore,
   },
 });
 
-export const WithAiPrepareSkipped = meta.story({
+export const WithAiSetupSkipped = meta.story({
   args: {
     availableItems: buildItems({
       controls: 'accepted',
       renderComponent: 'done',
       whatsNewStorybook10: 'done',
       viewports: 'skipped',
-      aiPrepare: 'skipped',
+      aiSetup: 'skipped',
     }),
     ...checklistStore,
   },
diff --git a/code/core/src/manager/settings/GuidePage.stories.tsx b/code/core/src/manager/settings/GuidePage.stories.tsx
index 308c252e5711..c617468fdba7 100644
--- a/code/core/src/manager/settings/GuidePage.stories.tsx
+++ b/code/core/src/manager/settings/GuidePage.stories.tsx
@@ -58,7 +58,7 @@ export const AiCtaSkipped = meta.story({
       widget: {},
       items: {
         ...initialState.items,
-        aiPrepare: { status: 'skipped' },
+        aiSetup: { status: 'skipped' },
         controls: { status: 'accepted' },
         renderComponent: { status: 'done' },
         viewports: { status: 'skipped' },
@@ -74,7 +74,7 @@ export const AiCtaDone = meta.story({
       widget: {},
       items: {
         ...initialState.items,
-        aiPrepare: { status: 'done' },
+        aiSetup: { status: 'done' },
         controls: { status: 'accepted' },
         renderComponent: { status: 'done' },
         viewports: { status: 'skipped' },
diff --git a/code/core/src/manager/settings/GuidePage.tsx b/code/core/src/manager/settings/GuidePage.tsx
index 6d7d28d9121a..9dae45ec510b 100644
--- a/code/core/src/manager/settings/GuidePage.tsx
+++ b/code/core/src/manager/settings/GuidePage.tsx
@@ -38,7 +38,7 @@ const Intro = styled.div(({ theme }) => ({
 export const GuidePage = () => {
   const checklist = useChecklist();
 
-  const aiPrepareItem = checklist.availableItems.find((item) => item.id === 'aiPrepare');
+  const aiSetupItem = checklist.availableItems.find((item) => item.id === 'aiSetup');
 
   return (
     <Container>
@@ -49,10 +49,10 @@ export const GuidePage = () => {
           will help you make the most of your Storybook.
         </p>
       </Intro>
-      {aiPrepareItem && (
-        <AiSetupBlock item={aiPrepareItem} reset={checklist.reset} skip={checklist.skip} />
+      {aiSetupItem && (
+        <AiSetupBlock item={aiSetupItem} reset={checklist.reset} skip={checklist.skip} />
       )}
-      <Checklist {...checklist} forceCollapsed={aiPrepareItem?.isOpen} />
+      <Checklist {...checklist} forceCollapsed={aiSetupItem?.isOpen} />
       {global.FEATURES?.sidebarOnboardingChecklist !== false && (
         <>
           {checklist.openItems.length === 0 ? (
diff --git a/code/core/src/shared/checklist-store/checklistData.state.ts b/code/core/src/shared/checklist-store/checklistData.state.ts
index 39899531c972..0f85b44b26f9 100644
--- a/code/core/src/shared/checklist-store/checklistData.state.ts
+++ b/code/core/src/shared/checklist-store/checklistData.state.ts
@@ -3,7 +3,7 @@ import type { StoreState } from './index.ts';
 export const initialState = {
   items: {
     accessibilityTests: { status: 'open' },
-    aiPrepare: { status: 'open' },
+    aiSetup: { status: 'open' },
     autodocs: { status: 'open' },
     ciTests: { status: 'open' },
     controls: { status: 'open' },
diff --git a/code/core/src/shared/checklist-store/checklistData.tsx b/code/core/src/shared/checklist-store/checklistData.tsx
index 7cc0e02061f9..0be79c578c2a 100644
--- a/code/core/src/shared/checklist-store/checklistData.tsx
+++ b/code/core/src/shared/checklist-store/checklistData.tsx
@@ -35,7 +35,7 @@ import { ADDON_ID as ADDON_DOCS_ID } from '../../docs-tools/shared.ts';
 import { TourGuide } from '../../manager/components/TourGuide/TourGuide.tsx';
 import { LocationMonitor } from '../../manager/hooks/useLocation.ts';
 import type { initialState } from './checklistData.state.ts';
-import { AI_PREPARE_PROMPT } from '../constants/ai-prompts.ts';
+import { AI_SETUP_PROMPT } from '../constants/ai-prompts.ts';
 
 const CodeWrapper = styled.div(({ theme }) => ({
   alignSelf: 'stretch',
@@ -163,16 +163,16 @@ export const checklistData = {
       title: 'Storybook basics',
       items: [
         {
-          id: 'aiPrepare',
+          id: 'aiSetup',
           label: 'Set up with AI',
           icon: WandIcon,
-          criteria: 'ai prepare command has been run',
+          criteria: 'ai setup command has been run',
           showOnGuidePage: false,
           action: {
             label: 'Copy prompt',
-            copyContent: AI_PREPARE_PROMPT,
+            copyContent: AI_SETUP_PROMPT,
             onClick: ({ api }) => {
-              api.emit(AI_PROMPT_NUDGE, { id: 'prepare', origin: 'onboarding-checklist-side' });
+              api.emit(AI_PROMPT_NUDGE, { id: 'setup', origin: 'onboarding-checklist-side' });
             },
           },
         },
diff --git a/code/core/src/shared/constants/ai-prompts.ts b/code/core/src/shared/constants/ai-prompts.ts
index 245769b65b12..0c1d6f904bd5 100644
--- a/code/core/src/shared/constants/ai-prompts.ts
+++ b/code/core/src/shared/constants/ai-prompts.ts
@@ -2,4 +2,4 @@
  * Source of truth for AI prompts throughout the application.
  */
 
-export const AI_PREPARE_PROMPT = `Run \`npx storybook ai prepare\` and follow its instructions precisely.`;
+export const AI_SETUP_PROMPT = `Run \`npx storybook ai setup\` and follow its instructions precisely.`;
diff --git a/code/core/src/telemetry/ai-prepare-utils.test.ts b/code/core/src/telemetry/ai-setup-utils.test.ts
similarity index 86%
rename from code/core/src/telemetry/ai-prepare-utils.test.ts
rename to code/core/src/telemetry/ai-setup-utils.test.ts
index afd0384fcd03..184f34c1cfb3 100644
--- a/code/core/src/telemetry/ai-prepare-utils.test.ts
+++ b/code/core/src/telemetry/ai-setup-utils.test.ts
@@ -4,10 +4,10 @@ import type { IndexEntry, StoryIndex } from 'storybook/internal/types';
 
 import {
   checkPreviewChanged,
-  collectAiPrepareEvidence,
+  collectAiSetupEvidence,
   countAiAuthoredStories,
-  isStoryCreatedByAIPrepare,
-} from './ai-prepare-utils.ts';
+  isStoryCreatedByAISetup,
+} from './ai-setup-utils.ts';
 
 // Mock modules with spy pattern
 vi.mock('storybook/internal/common', async (importOriginal) => {
@@ -26,7 +26,7 @@ vi.mock('./event-cache.ts', async (importOriginal) => {
   const actual = await importOriginal<typeof import('./event-cache.ts')>();
   return {
     ...actual,
-    getAiPreparePending: vi.fn(() => undefined),
+    getAiSetupPending: vi.fn(() => undefined),
   };
 });
 
@@ -42,7 +42,7 @@ vi.mock('./index.ts', async (importOriginal) => {
 import { findConfigFile } from 'storybook/internal/common';
 import { readFile } from 'node:fs/promises';
 import { detectAgent } from './detect-agent.ts';
-import { getAiPreparePending } from './event-cache.ts';
+import { getAiSetupPending } from './event-cache.ts';
 import { SESSION_TIMEOUT } from './session-id.ts';
 import { telemetry } from './index.ts';
 
@@ -73,10 +73,10 @@ beforeEach(() => {
   vi.mocked(telemetry).mockResolvedValue(undefined);
 });
 
-describe('isStoryCreatedByAIPrepare', () => {
+describe('isStoryCreatedByAISetup', () => {
   it('returns true for stories with the ai-generated tag', () => {
     expect(
-      isStoryCreatedByAIPrepare({
+      isStoryCreatedByAISetup({
         type: 'story',
         title: 'Foo',
         tags: ['ai-generated', 'dev', 'play-fn'],
@@ -85,7 +85,7 @@ describe('isStoryCreatedByAIPrepare', () => {
   });
 
   it('returns false for regular stories', () => {
-    expect(isStoryCreatedByAIPrepare({ type: 'story', title: 'Foo' } as IndexEntry)).toBe(false);
+    expect(isStoryCreatedByAISetup({ type: 'story', title: 'Foo' } as IndexEntry)).toBe(false);
   });
 });
 
@@ -192,53 +192,53 @@ describe('checkPreviewChanged', () => {
   });
 });
 
-describe('collectAiPrepareEvidence', () => {
+describe('collectAiSetupEvidence', () => {
   it('does not fire when no agent detected', async () => {
     vi.mocked(detectAgent).mockReturnValue(undefined);
 
-    await collectAiPrepareEvidence('dev', '/test/config');
+    await collectAiSetupEvidence('dev', '/test/config');
     expect(telemetry).not.toHaveBeenCalled();
   });
 
   it('does not fire when no pending record', async () => {
     vi.mocked(detectAgent).mockReturnValue({ name: 'claude' });
-    vi.mocked(getAiPreparePending).mockResolvedValue(undefined);
+    vi.mocked(getAiSetupPending).mockResolvedValue(undefined);
 
-    await collectAiPrepareEvidence('dev', '/test/config');
+    await collectAiSetupEvidence('dev', '/test/config');
     expect(telemetry).not.toHaveBeenCalled();
   });
 
   it('does not fire when pending record is expired', async () => {
     vi.mocked(detectAgent).mockReturnValue({ name: 'claude' });
-    vi.mocked(getAiPreparePending).mockResolvedValue(
+    vi.mocked(getAiSetupPending).mockResolvedValue(
       makePendingRecord({ timestamp: Date.now() - SESSION_TIMEOUT - 1000 })
     );
 
-    await collectAiPrepareEvidence('dev', '/test/config');
+    await collectAiSetupEvidence('dev', '/test/config');
     expect(telemetry).not.toHaveBeenCalled();
   });
 
   it('does not fire when configDir does not match', async () => {
     vi.mocked(detectAgent).mockReturnValue({ name: 'claude' });
-    vi.mocked(getAiPreparePending).mockResolvedValue(
+    vi.mocked(getAiSetupPending).mockResolvedValue(
       makePendingRecord({ configDir: '/other/project/.storybook' })
     );
 
-    await collectAiPrepareEvidence('dev', '/test/config');
+    await collectAiSetupEvidence('dev', '/test/config');
     expect(telemetry).not.toHaveBeenCalled();
   });
 
   it('fires event with correct payload when all gates pass', async () => {
     vi.mocked(detectAgent).mockReturnValue({ name: 'claude' });
     const pending = makePendingRecord({ configDir: '/test/config' });
-    vi.mocked(getAiPreparePending).mockResolvedValue(pending);
+    vi.mocked(getAiSetupPending).mockResolvedValue(pending);
     vi.mocked(findConfigFile).mockReturnValue(pending.previewPath);
     vi.mocked(readFile).mockRejectedValue(new Error('ENOENT'));
 
-    await collectAiPrepareEvidence('dev', '/test/config');
+    await collectAiSetupEvidence('dev', '/test/config');
 
     expect(telemetry).toHaveBeenCalledWith(
-      'ai-prepare-evidence',
+      'ai-setup-evidence',
       expect.objectContaining({
         previewChanged: true,
         aiAuthoredStories: undefined,
@@ -254,13 +254,13 @@ describe('collectAiPrepareEvidence', () => {
   it('reports aiAuthoredStories as undefined when no story index provided', async () => {
     vi.mocked(detectAgent).mockReturnValue({ name: 'claude' });
     const pending = makePendingRecord({ configDir: '/test/config' });
-    vi.mocked(getAiPreparePending).mockResolvedValue(pending);
+    vi.mocked(getAiSetupPending).mockResolvedValue(pending);
     vi.mocked(findConfigFile).mockReturnValue(null);
 
-    await collectAiPrepareEvidence('dev', '/test/config');
+    await collectAiSetupEvidence('dev', '/test/config');
 
     expect(telemetry).toHaveBeenCalledWith(
-      'ai-prepare-evidence',
+      'ai-setup-evidence',
       expect.objectContaining({
         aiAuthoredStories: undefined,
       }),
@@ -275,7 +275,7 @@ describe('collectAiPrepareEvidence', () => {
       previewFile: null,
       previewHash: null,
     });
-    vi.mocked(getAiPreparePending).mockResolvedValue(pending);
+    vi.mocked(getAiSetupPending).mockResolvedValue(pending);
     vi.mocked(findConfigFile).mockReturnValue(null);
 
     const storyIndex = makeStoryIndex({
@@ -296,10 +296,10 @@ describe('collectAiPrepareEvidence', () => {
       },
     });
 
-    await collectAiPrepareEvidence('dev', '/test/config', storyIndex);
+    await collectAiSetupEvidence('dev', '/test/config', storyIndex);
 
     expect(telemetry).toHaveBeenCalledWith(
-      'ai-prepare-evidence',
+      'ai-setup-evidence',
       expect.objectContaining({
         aiAuthoredStories: 1,
       }),
diff --git a/code/core/src/telemetry/ai-prepare-utils.ts b/code/core/src/telemetry/ai-setup-utils.ts
similarity index 81%
rename from code/core/src/telemetry/ai-prepare-utils.ts
rename to code/core/src/telemetry/ai-setup-utils.ts
index 203c744c97d4..fac23a2098a8 100644
--- a/code/core/src/telemetry/ai-prepare-utils.ts
+++ b/code/core/src/telemetry/ai-setup-utils.ts
@@ -1,4 +1,4 @@
-import { flushAiPreparePending, getAiPreparePending } from './event-cache.ts';
+import { flushAiSetupPending, getAiSetupPending } from './event-cache.ts';
 import { SESSION_TIMEOUT } from './session-id.ts';
 import { createHash } from 'node:crypto';
 import { readFile } from 'node:fs/promises';
@@ -10,19 +10,19 @@ import type { EventType } from './types.ts';
 import type { IndexEntry, StoryIndex } from 'storybook/internal/types';
 
 /**
- * Determines whether a story index entry was authored by the `sb ai prepare` flow.
+ * Determines whether a story index entry was authored by the `sb ai setup` flow.
  * Currently checks title prefix. When we migrate to a tag-based approach,
  * swap this to check for the tag instead — this is the single swap point.
  */
-export function isStoryCreatedByAIPrepare(entry: IndexEntry): boolean {
+export function isStoryCreatedByAISetup(entry: IndexEntry): boolean {
   return entry.type === 'story' && (entry.tags?.includes('ai-generated') ?? false);
 }
 
 /**
- * Count stories in the index that were created by `sb ai prepare`.
+ * Count stories in the index that were created by `sb ai setup`.
  */
 export function countAiAuthoredStories(storyIndex: StoryIndex): number {
-  return Object.values(storyIndex.entries).filter(isStoryCreatedByAIPrepare).length;
+  return Object.values(storyIndex.entries).filter(isStoryCreatedByAISetup).length;
 }
 
 /**
@@ -48,7 +48,7 @@ export async function snapshotPreviewFile(
 }
 
 /**
- * Check whether the preview file has changed from an ai-prepare baseline.
+ * Check whether the preview file has changed from an ai-setup baseline.
  * Returns true if: hash differs, file appeared, file disappeared, or file is unreadable.
  */
 export async function checkPreviewChanged(
@@ -73,7 +73,7 @@ export async function checkPreviewChanged(
 }
 
 /**
- * Check for a pending ai-prepare record and fire an evidence event if found.
+ * Check for a pending ai-setup record and fire an evidence event if found.
  *
  * Called from:
  * - `withTelemetry` after the boot event for non-dev/build CLI commands (no story index)
@@ -81,7 +81,7 @@ export async function checkPreviewChanged(
  *
  * Gated on: agent detected → pending record exists → within session window → configDir matches.
  */
-export async function collectAiPrepareEvidence(
+export async function collectAiSetupEvidence(
   eventType: EventType,
   configDir: string | undefined,
   storyIndex?: StoryIndex
@@ -93,8 +93,8 @@ export async function collectAiPrepareEvidence(
       return;
     }
 
-    // Gate 2: Is there a pending ai-prepare record?
-    const pending = await getAiPreparePending();
+    // Gate 2: Is there a pending ai-setup record?
+    const pending = await getAiSetupPending();
     if (!pending) {
       return;
     }
@@ -105,17 +105,17 @@ export async function collectAiPrepareEvidence(
     }
 
     // Gate 4: Is it within the session window?
-    const timeSincePrepare = Date.now() - pending.timestamp;
-    if (timeSincePrepare > SESSION_TIMEOUT) {
+    const timeSinceSetup = Date.now() - pending.timestamp;
+    if (timeSinceSetup > SESSION_TIMEOUT) {
       // Session expired, clean up pending record.
-      await flushAiPreparePending();
+      await flushAiSetupPending();
       return;
     }
 
-    // Don't fire evidence for ai-prepare itself — the prepare command gives the
+    // Don't fire evidence for ai-setup itself — the setup command gives the
     // prompt to the agent and exits, so we only expect changes after the agent
     // has started processing it.
-    if (eventType === 'ai-prepare') {
+    if (eventType === 'ai-setup') {
       return;
     }
 
@@ -126,12 +126,12 @@ export async function collectAiPrepareEvidence(
     const aiAuthoredStories = storyIndex ? countAiAuthoredStories(storyIndex) : undefined;
 
     await telemetry(
-      'ai-prepare-evidence',
+      'ai-setup-evidence',
       {
         previewChanged,
         aiAuthoredStories,
         sessionId: pending.sessionId,
-        timeSincePrepare,
+        timeSinceSetup,
       },
       {
         immediate: true,
diff --git a/code/core/src/telemetry/event-cache.test.ts b/code/core/src/telemetry/event-cache.test.ts
index 76b7a701e156..bd0f9494c7c9 100644
--- a/code/core/src/telemetry/event-cache.test.ts
+++ b/code/core/src/telemetry/event-cache.test.ts
@@ -5,8 +5,8 @@ import { cache } from 'storybook/internal/common';
 
 import type { CacheEntry } from './event-cache.ts';
 import {
-  flushAiPreparePending,
-  getAiPreparePending,
+  flushAiSetupPending,
+  getAiSetupPending,
   getLastEvents,
   getPrecedingUpgrade,
   set,
@@ -354,7 +354,7 @@ describe('event-cache', () => {
     });
   });
 
-  describe('ai-prepare pending cache', () => {
+  describe('ai-setup pending cache', () => {
     let cacheGetMock: MockInstance;
     let cacheRemoveMock: MockInstance;
 
@@ -364,7 +364,7 @@ describe('event-cache', () => {
       cacheRemoveMock = vi.mocked(cache.remove);
     });
 
-    it('returns cached ai-prepare pending record when present', async () => {
+    it('returns cached ai-setup pending record when present', async () => {
       const pending = {
         timestamp: 123,
         sessionId: 'session-1',
@@ -375,18 +375,18 @@ describe('event-cache', () => {
 
       cacheGetMock.mockResolvedValueOnce(pending);
 
-      await expect(getAiPreparePending()).resolves.toEqual(pending);
-      expect(cacheGetMock).toHaveBeenCalledWith('ai-prepare-pending');
+      await expect(getAiSetupPending()).resolves.toEqual(pending);
+      expect(cacheGetMock).toHaveBeenCalledWith('ai-setup-pending');
     });
 
-    it('removes the cached ai-prepare pending record and returns undefined', async () => {
+    it('removes the cached ai-setup pending record and returns undefined', async () => {
       cacheRemoveMock.mockResolvedValueOnce(undefined);
       cacheGetMock.mockResolvedValueOnce(undefined);
 
-      await expect(flushAiPreparePending()).resolves.toBeUndefined();
-      expect(cacheRemoveMock).toHaveBeenCalledWith('ai-prepare-pending');
-      await expect(getAiPreparePending()).resolves.toBeUndefined();
-      expect(cacheGetMock).toHaveBeenCalledWith('ai-prepare-pending');
+      await expect(flushAiSetupPending()).resolves.toBeUndefined();
+      expect(cacheRemoveMock).toHaveBeenCalledWith('ai-setup-pending');
+      await expect(getAiSetupPending()).resolves.toBeUndefined();
+      expect(cacheGetMock).toHaveBeenCalledWith('ai-setup-pending');
     });
   });
 });
diff --git a/code/core/src/telemetry/event-cache.ts b/code/core/src/telemetry/event-cache.ts
index ae3d265d10a1..84b1a98a889d 100644
--- a/code/core/src/telemetry/event-cache.ts
+++ b/code/core/src/telemetry/event-cache.ts
@@ -82,11 +82,11 @@ export const getPrecedingUpgrade = async (
     : undefined;
 };
 /**
- * Record cached at ai-prepare time.
+ * Record cached at ai-setup time.
  * Read by subsequent CLI entry points for evidence collection.
  * Canonical definition — imported by event-cache.ts and prepare-requirements.ts.
  */
-export interface AiPreparePendingRecord {
+export interface AiSetupPendingRecord {
   timestamp: number;
   sessionId: string;
   configDir: string;
@@ -94,15 +94,15 @@ export interface AiPreparePendingRecord {
   previewHash: string | null;
 }
 
-export const getAiPreparePending = async (): Promise<AiPreparePendingRecord | undefined> => {
+export const getAiSetupPending = async (): Promise<AiSetupPendingRecord | undefined> => {
   // Wait for any pending set operations to complete before reading
   await processingPromise;
-  return (await cache.get('ai-prepare-pending')) ?? undefined;
+  return (await cache.get('ai-setup-pending')) ?? undefined;
 };
 
-export const flushAiPreparePending = async (): Promise<undefined> => {
+export const flushAiSetupPending = async (): Promise<undefined> => {
   // Wait for any pending set operations to complete before removing
   await processingPromise;
-  await cache.remove('ai-prepare-pending');
+  await cache.remove('ai-setup-pending');
   return undefined;
 };
diff --git a/code/core/src/telemetry/index.ts b/code/core/src/telemetry/index.ts
index a27b99e44e55..438b38799c71 100644
--- a/code/core/src/telemetry/index.ts
+++ b/code/core/src/telemetry/index.ts
@@ -16,21 +16,21 @@ export * from './sanitize.ts';
 
 export * from './error-collector.ts';
 
-export * from './ai-prepare-utils.ts';
+export * from './ai-setup-utils.ts';
 
 export {
   getPrecedingUpgrade,
   getLastEvents,
   type CacheEntry,
-  getAiPreparePending,
-  type AiPreparePendingRecord,
+  getAiSetupPending,
+  type AiSetupPendingRecord,
 } from './event-cache.ts';
 
 export { getSessionId, SESSION_TIMEOUT } from './session-id.ts';
 
 export { addToGlobalContext } from './telemetry.ts';
 
-export { detectAgent } from './detect-agent.ts';
+export { detectAgent, type AgentInfo } from './detect-agent.ts';
 
 /** Is this story part of the CLI generated examples, including user-created stories in those files */
 export const isExampleStoryId = (storyId: string) =>
diff --git a/code/core/src/telemetry/types.ts b/code/core/src/telemetry/types.ts
index de4945851310..9b784604d6ab 100644
--- a/code/core/src/telemetry/types.ts
+++ b/code/core/src/telemetry/types.ts
@@ -45,9 +45,9 @@ export type EventType =
   | 'doctor'
   | 'share'
   | 'ghost-stories'
-  | 'ai-prepare'
-  | 'ai-prepare-evidence'
-  | 'ai-prepare-story-scoring'
+  | 'ai-setup'
+  | 'ai-setup-evidence'
+  | 'ai-setup-story-scoring'
   | 'ai-prompt-nudge';
 
 export interface Dependency {
diff --git a/code/lib/cli-storybook/src/ai/index.ts b/code/lib/cli-storybook/src/ai/index.ts
index 5110b798b050..4107590ffc68 100644
--- a/code/lib/cli-storybook/src/ai/index.ts
+++ b/code/lib/cli-storybook/src/ai/index.ts
@@ -8,7 +8,7 @@ import {
   getSessionId,
   snapshotPreviewFile,
   telemetry,
-  type AiPreparePendingRecord,
+  type AiSetupPendingRecord,
 } from 'storybook/internal/telemetry';
 import { SupportedLanguage } from 'storybook/internal/types';
 
@@ -16,9 +16,9 @@ import { ProjectTypeService } from '../../../create-storybook/src/services/Proje
 
 import { getStorybookData } from '../automigrate/helpers/mainConfigFile.ts';
 import { generateMarkdownOutput } from './prompt.ts';
-import type { ProjectInfo, AiPrepareOptions } from './types.ts';
+import type { ProjectInfo, AiSetupOptions } from './types.ts';
 
-export async function aiPrepare(options: AiPrepareOptions): Promise<void> {
+export async function aiSetup(options: AiSetupOptions): Promise<void> {
   const { configDir: userConfigDir, packageManager: packageManagerName, output } = options;
 
   let projectInfo: ProjectInfo;
@@ -82,7 +82,7 @@ export async function aiPrepare(options: AiPrepareOptions): Promise<void> {
   const result = generateMarkdownOutput(projectInfo);
   const markdownOutput = result.markdown;
 
-  await telemetry('ai-prepare', {
+  await telemetry('ai-setup', {
     cliOptions: {
       output: output ? 'file' : undefined,
       configDir: projectInfo.configDir,
@@ -103,13 +103,13 @@ export async function aiPrepare(options: AiPrepareOptions): Promise<void> {
   const resolvedConfigDir = resolve(projectInfo.configDir);
   const previewSnapshot = await snapshotPreviewFile(resolvedConfigDir);
   const sessionId = await getSessionId();
-  const pendingRecord: AiPreparePendingRecord = {
+  const pendingRecord: AiSetupPendingRecord = {
     timestamp: Date.now(),
     sessionId,
     configDir: resolvedConfigDir,
     ...previewSnapshot,
   };
-  await cache.set('ai-prepare-pending', pendingRecord);
+  await cache.set('ai-setup-pending', pendingRecord);
 
   if (output) {
     const outputPath = resolve(output);
diff --git a/code/lib/cli-storybook/src/ai/types.ts b/code/lib/cli-storybook/src/ai/types.ts
index 5d7e0abeb2ec..3a9a1b52be28 100644
--- a/code/lib/cli-storybook/src/ai/types.ts
+++ b/code/lib/cli-storybook/src/ai/types.ts
@@ -1,6 +1,6 @@
 import type { SupportedRenderer } from 'storybook/internal/types';
 
-export interface AiPrepareOptions {
+export interface AiSetupOptions {
   configDir?: string;
   packageManager?: string;
   output?: string;
diff --git a/code/lib/cli-storybook/src/bin/run.ts b/code/lib/cli-storybook/src/bin/run.ts
index 28ad72ca7ad8..bb96b8e94ac3 100644
--- a/code/lib/cli-storybook/src/bin/run.ts
+++ b/code/lib/cli-storybook/src/bin/run.ts
@@ -23,7 +23,7 @@ import { doctor } from '../doctor/index.ts';
 import { link } from '../link.ts';
 import { migrate } from '../migrate.ts';
 import { sandbox } from '../sandbox.ts';
-import { aiPrepare } from '../ai/index.ts';
+import { aiSetup } from '../ai/index.ts';
 import { type UpgradeOptions, upgrade } from '../upgrade.ts';
 
 addToGlobalContext('cliVersion', versions.storybook);
@@ -307,7 +307,7 @@ const aiCommand = command('ai')
   );
 
 aiCommand
-  .command('prepare')
+  .command('setup')
   .description('Generate setup instructions to write stories for real components')
   .addOption(
     new Option('--package-manager <type>', 'Force package manager for installing deps').choices(
@@ -318,8 +318,8 @@ aiCommand
   .action(async (options, cmd) => {
     const parentOptions = cmd.parent?.opts() ?? {};
     const mergedOptions = { ...parentOptions, ...options };
-    await withTelemetry('ai-prepare', { cliOptions: mergedOptions }, async () => {
-      await aiPrepare(mergedOptions);
+    await withTelemetry('ai-setup', { cliOptions: mergedOptions }, async () => {
+      await aiSetup(mergedOptions);
     }).catch(handleCommandFailure(mergedOptions.logfile));
   });
 
diff --git a/code/lib/create-storybook/src/commands/FinalizationCommand.test.ts b/code/lib/create-storybook/src/commands/FinalizationCommand.test.ts
index 1a45fd8601a0..7eec40c78880 100644
--- a/code/lib/create-storybook/src/commands/FinalizationCommand.test.ts
+++ b/code/lib/create-storybook/src/commands/FinalizationCommand.test.ts
@@ -126,7 +126,7 @@ describe('FinalizationCommand', () => {
       expect(logger.step).toHaveBeenCalledWith(
         expect.stringContaining('is not entirely set up yet')
       );
-      expect(logger.step).toHaveBeenCalledWith(expect.stringContaining('npx storybook ai prepare'));
+      expect(logger.step).toHaveBeenCalledWith(expect.stringContaining('npx storybook ai setup'));
     });
 
     it('should show standard success message when showAgentFollowUp=false with AI instructions', async () => {
@@ -180,7 +180,7 @@ describe('FinalizationCommand', () => {
       expect(logger.step).toHaveBeenCalledWith(
         expect.stringContaining('To finalize setting up with AI')
       );
-      expect(logger.step).toHaveBeenCalledWith(expect.stringContaining('npx storybook ai prepare'));
+      expect(logger.step).toHaveBeenCalledWith(expect.stringContaining('npx storybook ai setup'));
     });
 
     it('should NOT show AI instructions when showAiInstructions=false', async () => {
diff --git a/code/lib/create-storybook/src/commands/FinalizationCommand.ts b/code/lib/create-storybook/src/commands/FinalizationCommand.ts
index 78348f277fef..e8665ca1e907 100644
--- a/code/lib/create-storybook/src/commands/FinalizationCommand.ts
+++ b/code/lib/create-storybook/src/commands/FinalizationCommand.ts
@@ -9,7 +9,7 @@ import { dedent } from 'ts-dedent';
 
 export type FinalizationCommandOptions = {
   logfile: string | boolean | undefined;
-  /** When true, show the agent follow-up message ("run npx storybook ai prepare") instead of the normal success message */
+  /** When true, show the agent follow-up message ("run npx storybook ai setup") instead of the normal success message */
   showAgentFollowUp: boolean;
   /** When true, show the "paste this prompt to your AI agent" instructions */
   showAiInstructions: boolean;
@@ -89,7 +89,7 @@ export class FinalizationCommand {
       logger.step(
         CLI_COLORS.storybook(
           dedent`Storybook is installed but is not entirely set up yet.
-          To finish setting up, now run \`npx storybook ai prepare\` and follow its instructions precisely.`
+          To finish setting up, now run \`npx storybook ai setup\` and follow its instructions precisely.`
         )
       );
     } else {
@@ -111,7 +111,7 @@ export class FinalizationCommand {
     if (this.options.showAiInstructions) {
       logger.step(dedent`To finalize setting up with AI, paste this prompt to your AI agent:
 
-        ${CLI_COLORS.storybook(`Run \`npx storybook ai prepare\` and follow its instructions precisely.`)}
+        ${CLI_COLORS.storybook(`Run \`npx storybook ai setup\` and follow its instructions precisely.`)}
       `);
     }
   }
diff --git a/code/lib/create-storybook/src/commands/UserPreferencesCommand.test.ts b/code/lib/create-storybook/src/commands/UserPreferencesCommand.test.ts
index f62b63ce47c2..c7b2186b289a 100644
--- a/code/lib/create-storybook/src/commands/UserPreferencesCommand.test.ts
+++ b/code/lib/create-storybook/src/commands/UserPreferencesCommand.test.ts
@@ -21,7 +21,7 @@ interface CommandWithPrivates {
   telemetryService: {
     trackNewUserCheck: ReturnType<typeof vi.fn>;
     trackInstallType: ReturnType<typeof vi.fn>;
-    trackAiPromptNudge: ReturnType<typeof vi.fn>;
+    trackAiSetupNudge: ReturnType<typeof vi.fn>;
   };
 }
 
@@ -35,7 +35,7 @@ describe('UserPreferencesCommand', () => {
     renderer: 'react' as SupportedRenderer,
     projectType: ProjectType.REACT,
     isTestFeatureAvailable: true,
-    isAiPrepareAvailable: false,
+    isAiSetupAvailable: false,
   };
 
   afterAll(() => {
@@ -93,7 +93,7 @@ describe('UserPreferencesCommand', () => {
     const mockTelemetryService = {
       trackNewUserCheck: vi.fn(),
       trackInstallType: vi.fn(),
-      trackAiPromptNudge: vi.fn(),
+      trackAiSetupNudge: vi.fn(),
     };
 
     // Inject mocked services
@@ -225,7 +225,7 @@ describe('UserPreferencesCommand', () => {
 
       const result = await command.execute({
         ...defaultExecuteOptions,
-        isAiPrepareAvailable: true,
+        isAiSetupAvailable: true,
       });
 
       expect(prompt.confirm).toHaveBeenCalledWith(
@@ -249,7 +249,7 @@ describe('UserPreferencesCommand', () => {
 
       const result = await command.execute({
         ...defaultExecuteOptions,
-        isAiPrepareAvailable: true,
+        isAiSetupAvailable: true,
       });
 
       expect(result.selectedFeatures.has(Feature.AI)).toBe(false);
@@ -263,7 +263,7 @@ describe('UserPreferencesCommand', () => {
 
       const result = await command.execute({
         ...defaultExecuteOptions,
-        isAiPrepareAvailable: true,
+        isAiSetupAvailable: true,
       });
 
       expect(prompt.confirm).not.toHaveBeenCalled();
@@ -287,19 +287,19 @@ describe('UserPreferencesCommand', () => {
       (yesCommand as unknown as CommandWithPrivates).telemetryService = {
         trackNewUserCheck: vi.fn(),
         trackInstallType: vi.fn(),
-        trackAiPromptNudge: vi.fn(),
+        trackAiSetupNudge: vi.fn(),
       };
 
       const result = await yesCommand.execute({
         ...defaultExecuteOptions,
-        isAiPrepareAvailable: true,
+        isAiSetupAvailable: true,
       });
 
       expect(prompt.confirm).not.toHaveBeenCalled();
       expect(result.selectedFeatures.has(Feature.AI)).toBe(true);
     });
 
-    it('should not prompt for AI setup when isAiPrepareAvailable is false', async () => {
+    it('should not prompt for AI setup when isAiSetupAvailable is false', async () => {
       Object.defineProperty(process.stdout, 'isTTY', {
         value: true,
         configurable: true,
@@ -309,7 +309,7 @@ describe('UserPreferencesCommand', () => {
 
       const result = await command.execute({
         ...defaultExecuteOptions,
-        isAiPrepareAvailable: false,
+        isAiSetupAvailable: false,
       });
 
       expect(prompt.confirm).not.toHaveBeenCalled();
@@ -329,7 +329,7 @@ describe('UserPreferencesCommand', () => {
 
       const result = await command.execute({
         ...defaultExecuteOptions,
-        isAiPrepareAvailable: true,
+        isAiSetupAvailable: true,
       });
 
       expect(result.selectedFeatures.has(Feature.AI)).toBe(true);
@@ -351,7 +351,7 @@ describe('UserPreferencesCommand', () => {
 
       const result = await command.execute({
         ...defaultExecuteOptions,
-        isAiPrepareAvailable: true,
+        isAiSetupAvailable: true,
       });
 
       expect(result.selectedFeatures.has(Feature.AI)).toBe(false);
@@ -370,11 +370,11 @@ describe('UserPreferencesCommand', () => {
 
       await command.execute({
         ...defaultExecuteOptions,
-        isAiPrepareAvailable: true,
+        isAiSetupAvailable: true,
       });
 
       const telemetryService = (command as unknown as CommandWithPrivates).telemetryService;
-      expect(telemetryService.trackAiPromptNudge).toHaveBeenCalledWith({ skipPrompt: false });
+      expect(telemetryService.trackAiSetupNudge).toHaveBeenCalledWith({ skipPrompt: false });
     });
 
     it('should not track ai-prompt-nudge telemetry when user declines AI setup', async () => {
@@ -388,23 +388,23 @@ describe('UserPreferencesCommand', () => {
 
       await command.execute({
         ...defaultExecuteOptions,
-        isAiPrepareAvailable: true,
+        isAiSetupAvailable: true,
       });
 
       const telemetryService = (command as unknown as CommandWithPrivates).telemetryService;
-      expect(telemetryService.trackAiPromptNudge).not.toHaveBeenCalled();
+      expect(telemetryService.trackAiSetupNudge).not.toHaveBeenCalled();
     });
 
     it('should track ai-prompt-nudge telemetry when AI is auto-accepted in non-interactive mode', async () => {
       // Non-interactive (no TTY) with AI available — auto-accepts
       const result = await command.execute({
         ...defaultExecuteOptions,
-        isAiPrepareAvailable: true,
+        isAiSetupAvailable: true,
       });
 
       expect(result.selectedFeatures.has(Feature.AI)).toBe(true);
       const telemetryService = (command as unknown as CommandWithPrivates).telemetryService;
-      expect(telemetryService.trackAiPromptNudge).toHaveBeenCalledWith({ skipPrompt: true });
+      expect(telemetryService.trackAiSetupNudge).toHaveBeenCalledWith({ skipPrompt: true });
     });
   });
 
diff --git a/code/lib/create-storybook/src/commands/UserPreferencesCommand.ts b/code/lib/create-storybook/src/commands/UserPreferencesCommand.ts
index f16a6af3c815..bc25b712bc7d 100644
--- a/code/lib/create-storybook/src/commands/UserPreferencesCommand.ts
+++ b/code/lib/create-storybook/src/commands/UserPreferencesCommand.ts
@@ -35,7 +35,7 @@ export interface UserPreferencesOptions {
   renderer: SupportedRenderer;
   projectType: ProjectType;
   isTestFeatureAvailable: boolean;
-  isAiPrepareAvailable: boolean;
+  isAiSetupAvailable: boolean;
 }
 
 /**
@@ -80,9 +80,7 @@ export class UserPreferencesCommand {
         : 'recommended';
 
     // Ask about AI setup (only available for compatible projects, e.g. React + Vite)
-    const useAiForSetup = options.isAiPrepareAvailable
-      ? await this.promptAiSetup(skipPrompt)
-      : false;
+    const useAiForSetup = options.isAiSetupAvailable ? await this.promptAiSetup(skipPrompt) : false;
 
     const selectedFeatures = this.determineFeatures(
       installType,
@@ -228,7 +226,7 @@ export class UserPreferencesCommand {
         });
 
     if (useAi) {
-      await this.telemetryService.trackAiPromptNudge({ skipPrompt });
+      await this.telemetryService.trackAiSetupNudge({ skipPrompt });
     }
 
     return useAi;
diff --git a/code/lib/create-storybook/src/initiate.ts b/code/lib/create-storybook/src/initiate.ts
index e8ec6c27e546..5b6452862004 100644
--- a/code/lib/create-storybook/src/initiate.ts
+++ b/code/lib/create-storybook/src/initiate.ts
@@ -29,7 +29,7 @@ import type { CommandOptions } from './generators/types.ts';
 import { FeatureCompatibilityService } from './services/FeatureCompatibilityService.ts';
 import { TelemetryService } from './services/TelemetryService.ts';
 
-/** Validate test feature compatibility and check AI prepare support */
+/** Validate test feature compatibility and check AI setup support */
 async function checkFeatureSupport(
   packageManager: JsPackageManager,
   framework: SupportedFramework | null,
@@ -37,7 +37,7 @@ async function checkFeatureSupport(
   renderer: SupportedRenderer
 ): Promise<{
   isTestFeatureAvailable: boolean;
-  isAiPrepareAvailable: boolean;
+  isAiSetupAvailable: boolean;
 }> {
   const featureService = new FeatureCompatibilityService(packageManager);
 
@@ -47,11 +47,11 @@ async function checkFeatureSupport(
     process.cwd()
   );
 
-  const aiPrepare = FeatureCompatibilityService.supportsAIPrepareFeature(renderer, builder);
+  const aiSetup = FeatureCompatibilityService.supportsAISetupFeature(renderer, builder);
 
   return {
     isTestFeatureAvailable: result.compatible,
-    isAiPrepareAvailable: aiPrepare,
+    isAiSetupAvailable: aiSetup,
   };
 }
 
@@ -97,7 +97,7 @@ export async function doInitiate(options: CommandOptions): Promise<
   );
 
   // Step 4: Get user preferences and feature selections (with framework/builder for validation)
-  const { isTestFeatureAvailable, isAiPrepareAvailable } = await checkFeatureSupport(
+  const { isTestFeatureAvailable, isAiSetupAvailable } = await checkFeatureSupport(
     packageManager,
     framework,
     builder,
@@ -111,7 +111,7 @@ export async function doInitiate(options: CommandOptions): Promise<
     renderer,
     projectType,
     isTestFeatureAvailable,
-    isAiPrepareAvailable,
+    isAiSetupAvailable,
   });
 
   // Step 5: Execute generator with dependency collector (now with frameworkInfo)
diff --git a/code/lib/create-storybook/src/services/FeatureCompatibilityService.test.ts b/code/lib/create-storybook/src/services/FeatureCompatibilityService.test.ts
index 3f6145b596d3..93e0b7b71042 100644
--- a/code/lib/create-storybook/src/services/FeatureCompatibilityService.test.ts
+++ b/code/lib/create-storybook/src/services/FeatureCompatibilityService.test.ts
@@ -44,10 +44,10 @@ describe('FeatureCompatibilityService', () => {
     });
   });
 
-  describe('supportsAIPrepareFeature', () => {
+  describe('supportsAISetupFeature', () => {
     it('should return true for react renderer with vite builder', () => {
       expect(
-        FeatureCompatibilityService.supportsAIPrepareFeature(
+        FeatureCompatibilityService.supportsAISetupFeature(
           SupportedRenderer.REACT,
           SupportedBuilder.VITE
         )
@@ -56,7 +56,7 @@ describe('FeatureCompatibilityService', () => {
 
     it('should return false for vue3 renderer with vite builder', () => {
       expect(
-        FeatureCompatibilityService.supportsAIPrepareFeature(
+        FeatureCompatibilityService.supportsAISetupFeature(
           SupportedRenderer.VUE3,
           SupportedBuilder.VITE
         )
@@ -65,7 +65,7 @@ describe('FeatureCompatibilityService', () => {
 
     it('should return false for react renderer with webpack5 builder', () => {
       expect(
-        FeatureCompatibilityService.supportsAIPrepareFeature(
+        FeatureCompatibilityService.supportsAISetupFeature(
           SupportedRenderer.REACT,
           SupportedBuilder.WEBPACK5
         )
@@ -74,14 +74,14 @@ describe('FeatureCompatibilityService', () => {
 
     it('should return false for non-react renderer with non-vite builder', () => {
       expect(
-        FeatureCompatibilityService.supportsAIPrepareFeature(
+        FeatureCompatibilityService.supportsAISetupFeature(
           SupportedRenderer.ANGULAR,
           SupportedBuilder.WEBPACK5
         )
       ).toBe(false);
 
       expect(
-        FeatureCompatibilityService.supportsAIPrepareFeature(
+        FeatureCompatibilityService.supportsAISetupFeature(
           SupportedRenderer.SVELTE,
           SupportedBuilder.WEBPACK5
         )
diff --git a/code/lib/create-storybook/src/services/FeatureCompatibilityService.ts b/code/lib/create-storybook/src/services/FeatureCompatibilityService.ts
index 7f78a1214027..3097b2406b2d 100644
--- a/code/lib/create-storybook/src/services/FeatureCompatibilityService.ts
+++ b/code/lib/create-storybook/src/services/FeatureCompatibilityService.ts
@@ -33,8 +33,8 @@ export class FeatureCompatibilityService {
     );
   }
 
-  /** Check if AI-assisted setup (storybook ai prepare) is supported for this project configuration */
-  static supportsAIPrepareFeature(renderer: SupportedRenderer, builder: SupportedBuilder): boolean {
+  /** Check if AI-assisted setup (storybook ai setup) is supported for this project configuration */
+  static supportsAISetupFeature(renderer: SupportedRenderer, builder: SupportedBuilder): boolean {
     return renderer === SupportedRenderer.REACT && builder === SupportedBuilder.VITE;
   }
 
diff --git a/code/lib/create-storybook/src/services/TelemetryService.test.ts b/code/lib/create-storybook/src/services/TelemetryService.test.ts
index 404957f7d3be..b816482ce6be 100644
--- a/code/lib/create-storybook/src/services/TelemetryService.test.ts
+++ b/code/lib/create-storybook/src/services/TelemetryService.test.ts
@@ -73,20 +73,20 @@ describe('TelemetryService', () => {
     });
 
     it('should track ai-prompt-nudge event with context when prompt was shown', async () => {
-      await telemetryService.trackAiPromptNudge({ skipPrompt: false });
+      await telemetryService.trackAiSetupNudge({ skipPrompt: false });
 
       expect(telemetry).toHaveBeenCalledWith('ai-prompt-nudge', {
-        id: 'prepare',
+        id: 'setup',
         origin: 'init',
         context: { skipPrompt: false },
       });
     });
 
     it('should track ai-prompt-nudge event with context when prompt was skipped', async () => {
-      await telemetryService.trackAiPromptNudge({ skipPrompt: true });
+      await telemetryService.trackAiSetupNudge({ skipPrompt: true });
 
       expect(telemetry).toHaveBeenCalledWith('ai-prompt-nudge', {
-        id: 'prepare',
+        id: 'setup',
         origin: 'init',
         context: { skipPrompt: true },
       });
@@ -137,7 +137,7 @@ describe('TelemetryService', () => {
     });
 
     it('should not track ai-prompt-nudge event', async () => {
-      await telemetryService.trackAiPromptNudge({ skipPrompt: false });
+      await telemetryService.trackAiSetupNudge({ skipPrompt: false });
 
       expect(telemetry).not.toHaveBeenCalled();
     });
diff --git a/code/lib/create-storybook/src/services/TelemetryService.ts b/code/lib/create-storybook/src/services/TelemetryService.ts
index 56bc1ba6e9de..00f570f33857 100644
--- a/code/lib/create-storybook/src/services/TelemetryService.ts
+++ b/code/lib/create-storybook/src/services/TelemetryService.ts
@@ -33,9 +33,9 @@ export class TelemetryService {
   }
 
   /** Track when a user accepts the AI setup nudge prompt */
-  async trackAiPromptNudge(context: { skipPrompt: boolean }): Promise<void> {
+  async trackAiSetupNudge(context: { skipPrompt: boolean }): Promise<void> {
     await this.runTelemetryIfEnabled('ai-prompt-nudge', {
-      id: 'prepare',
+      id: 'setup',
       origin: 'init',
       context,
     });