The deep integration of big data applications and breakthrough technological innovation is pivotal to advancing China’s national big data strategy. Through the application of big data, enterprises can enhance their dynamic construction capabilities, improve synergy effects, and build a sustainable competitive advantage. This creates opportunities for breakthrough technological innovation and contributes to the development of new quality productive forces, carrying significant economic and practical significance. However, few studies have explored this from the perspectives of knowledge diversity and knowledge absorption capacity. Based on panel data from Shanghai and Shenzhen A-share listed companies spanning 2009 to 2023, this study adopts a resource orchestration perspective to theoretically and empirically investigate how big data applications affect enterprises’ breakthrough technological innovation. The findings reveal that big data applications significantly drive breakthrough technological innovation, with conclusions remaining robust after comprehensive endogeneity and robustness tests. Two mediating pathways are identified: enhancing enterprises’ knowledge diversity and improving knowledge absorption capabilities. Heterogeneity analyses further reveal that the positive effect is more pronounced among state-owned enterprises, enterprises with higher levels of knowledge diversity, those located in eastern China or provincial capitals, and enterprises operating in competitive or non-high-tech industries. Additionally, the intensity of intellectual property protection has a negative moderating effect in the process of big data applications promoting enterprises’ breakthrough technological innovation. Compared with previous studies, this study makes two expansions. First, in terms of research objects, it distinguishes itself from traditional innovation methods, classifies innovation into detailed categories, incorporates big data applications and breakthrough technological innovation into a unified research framework, and deeply explores the value impact and internal transmission mechanism of enterprises’ big data applications, filling the research gap on breakthrough technological innovation in big data applications. Second, in terms of research level and mechanism, it focuses on the micro-level of enterprises, embeds knowledge diversity and knowledge absorption capacity into the research framework of the relationship between big data applications and breakthrough technological innovation, and explores the influence mechanism of big data applications, or the underlying mechanism of digitalization, on breakthrough technological innovation, providing a new perspective for research and deeply revealing the fundamental reasons affecting enterprises’ breakthrough technological innovation. This study sheds light on the internal logic between enterprises’ big data applications and achieving breakthrough technological innovation, which is conducive to the government departments formulating more targeted big data development strategies, providing personalized policy support for different types of enterprises, and better guiding enterprises to achieve breakthrough technological innovation.