The only Paradox game I've played is Stellaris, which has god-awful AI. Looks like it uses the Clausewitz engine, so perhaps that's the reason. But the AI empires are terrible at balancing their economies, and it doesn't take long for the player to completely outstrip them, even when giving the AIs advanced starts and bonuses. And then the military AI isn't very good, to the point that when it is outmatched by a stronger opponent, it basically sits and waits to be slaughtered.

The only remote challenge comes in the form of the endgame 'crisis' which is basically an empire that appears late in the game with huge armies and has no economy, just scripted reinforcements and possibly some scripted counters from other special AI entities. None of the regular AI empires will have advanced enough to even think about fighting it, so it mostly serves as a check to see if the player has played efficiently enough to that point to stop the threat, and marks a good point to end your game once you have.

The scripted events make for a somewhat interesting game, but if they could provide an AI that actually made the universe feel like a competition in the early and mid game, and like the other empires were a factor in the end game, it would bring the game to another whole level for me. Of course, they'd probably have to fix their general game balance as well, which an a whole other issue.