Add butter, milk, water, sugar, vanilla extract, and salt to a medium-sized saucepan over medium-high heat. Once the mixture starts to boil and the butter has melted, remove from heat and stir in all add all-purpose flour at once. Stir with a wooden spoon until the mixture becomes a thick paste. Remove from heat and set aside for 5-7 minutes. The temperature of the dough should cool down to 145 - 150 degrees Fahrenheit.
In a separate bowl, add one egg and lightly whisk. Add egg to the flour mixture and stir with a wooden spoon until it’s incorporated. Do that with the remaining eggs, making sure to whisk each one first and stir it in one at a time. Let the dough rest 10 minutes. The dough will look shiny and glossy.
While the dough is resting, preheat air fryer to 400 degrees Fahrenheit.
Add dough to a piping bag with a large star tip.
Lightly spray the air fryer basket with oil or place a parchment liner in the basket. Pipe the dough into the air fryer basket, making sure they’re not touching. Close air fryer and cook dough for 7-8 minutes or until golden.
While the dough is cooking, make cinnamon sugar by combining sugar and cinnamon in a bowl.
Make chocolate sauce by combining heavy cream and chocolate chips in a microwave-safe bowl and heat in a microwave in 30 seconds increments, stirring each time. The chocolate sauce is done when smooth.
Once the churro dough is done, toss in the cinnamon-sugar mix. Serve with chocolate dipping sauce or whichever sauce you prefer.