Although tech stocks overall are still struggling, tech stocks with exposure to artificial intelligence and machine learning have taken off thus far in 2023, especially in the case of C3.ai (NYSE:AI). Year-to-date, AI stock has more than doubled in price.

With the launch of ChatGPT, Microsoft’s (NASDAQ:MSFT) partnership with OpenAI, ChatGPT’s developer, and the subsequent integration of chatbot technology into Microsoft’s Bing search engine, A.I. has become the hottest thing out there amongst tech investors, leading the market to go bananas for stocks in the sector.

While MSFT and some other large tech stocks have benefited from the trend, C3.ai has clearly received an outsized boost from this trend. You may be concerned about whether this rally is sustainable, and if shares have room to run from here.

Fortunately, the answer to both questions is a resounding yes.

AI Stock and Supposed Recent ‘Mania’

Investors who decided to dive into C3.ai stock before its mega-rally took shape have generated strong gains from their decision. Yet in some circles, the stock’s strong outperformance, even when compared to other A.I. plays, is being seen as a negative.

That is, after moving so far, so fast, AI stock has been declared a “meme stock” by its critics. Doing so suggests that its gains are based entirely on hope and hype, and not on any substance. As such, the stock has tremendous downside risk, as the supposed “mania,” which some are calling an “A.I. bubble,” begins to fade.

So, has AI become “merely a meme stock?” Not necessarily. Yes, plenty of investors have likely bought in, due to increased headlines and chatter online about the company. These speculators have likely conducted little in the way of research on AI, and are counting on momentum to carve out a path to trading profits.

However, unlike a lot of alleged “meme stocks,” there is a rationale for holding it that is based more on fundamentals and less on market psychology. At least, that’s the takeaway, if you have managed to dive into the details.

There’s Nothing Artificial About the Bull Case

Some investors have perhaps bought AI stock merely because it has A.I. in its ticker symbol, but the majority of investors that have bought this stock recently have done so for a much more substantive reason. You can make a bona fide bull case for this stock.

C3.ai has been developing and commercializing enterprise A.I. software for more than a decade. It is poised to finally experience its “liftoff moment,” as the adoption of A.I. and machine learning by corporate end-users takes shape, following the launch of ChatGPT.

In fact, it may start capitalizing on this trend as soon as next month. That’s when the first product from the company’s C3 Generative AI Product Suite has its general release. As I discussed in my last AI article, this product line is fully compatible with OpenAI’s products, including ChatGPT. This compatibility may mean high demand and big success right out of the gate.

That’s not all. There’s another promising recent development as of late. Just a few days back, the company announced that it had expanded its strategic collaboration agreement with Amazon’s (NASDAQ:AMZN) AWS unit. Both these developments could add to the stock’s recent gains.

Bottom Line

Based upon the latest developments with C3.ai, it’s clear that there’s more than “meme mania” at play with this stock. With the upcoming launch of C3 Generative AI, the company could begin to see an improvement to its operating performance.

However, while this may mean that AI isn’t at high risk of falling fully back to pre-spike prices, bear in mind that it may take some time for shares to take off once again.

It’s possible that the company’s upcoming earnings release on March 2 leads to some temporary weakness for shares. Considering this, it may be best to ease into a C3.ai position.

Nevertheless, as a long-term wager on the rise of A.I., AI stock is a strong opportunity.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.