For hundred of hours spent in this game, the AI in version 1.3 do use devastating Strategy spells, provided their sovereign/champion can level enough to go deep in their magic tree before they get destroyed.
But they don't know how to used it effectively, and usually only one spell per turn, which hardly do enough damage to intruding army.
The most annoying spell they used are usually 'Tremor' and 'Frozen'. 'Wither' are common too, but AI seems don't have enough death shards to make the effect noticeable.
Finally, since their spell effects are quite weak, I can't tell do AI develops their strategy towards magic or not.