With 2023 so far turning out to be the year that artificial intelligence really takes off, it’s no surprise that C3.ai (NYSE:AI) has become hot among investors. After skyrocketing in late January/early February, AI stock calmed down for a few weeks following this initial turbo-rally.

Earlier this month, shares made wild moves surrounding C3.ai’s latest earnings report. Spiking before and immediately after the release, shares have quickly given back these gains.

While it may seem that the stock may tumble further in the near-term, that doesn’t mean you need to stay away.

The long-term bull case remains unchanged. With this, let’s dive in and see why A.I. play can be a winner for your portfolio, if approached correctly.

A Closer Look at AI Stock

On March 2, C3.ai reported earnings for its fiscal third quarter (ending Jan. 31, 2023). For the quarter, the company reported revenue of $66.7 million, slightly ahead of guidance ($63 million to $65 million). As for earnings, C3.ai reported narrower-than-expected net losses.

That’s not all. CEO Thomas Siebel also provided upbeat statements regarding future operating performance, including one suggesting that the company will hit non-GAAP profitability by the next fiscal year (ending April 2024). With this, it makes sense why investors responded positively. However, in hindsight, perhaps the market got a bit carried away in their reaction.

After all, the results themselves, while solid, were not exactly at “set the world on fire” levels. That may explain why AI stock, after bolting from the low-$20s to nearly $30 per share on the day of the earnings release, made a return to prior price levels in a matter of days.

Yet while C3.ai’s return to the low-$20s per share may suggest that enthusiasm for the stock may cool, it’s not as if the opportunity here has fully come and gone.

The Silver Lining

There’s been a lot of hope and hype surrounding AI stock recently, but that’s not the first time this has happened. In fact shares remain far below their all-time high-water mark reached C3.ai’s IPO in December 2020.

There was arguably a greater level of buzz surrounding this stock, with investors highly confident that this company would quickly become a major player in the AI/machine learning space. Shares steadily fell back towards earth once it became clear the story would take time to play out,.

A similar scenario could play out now. The rising popularity of OpenAI’s ChatGPT platform has reignited enthusiasm for AI. The AI trend has yet to put C3.ai on track to enter high-growth mode, which will provide it a path to profitability.

However, unlike the last “hope and hype” wave, there is a silver lining. Not only is AI stock, even after its latest spike, much more reasonably priced. The company’s “liftoff moment,” is not off into the distant future, but on the horizon instead.

Bottom Line

As implied by Siebel’s aforementioned statements, C3.ai may be close to hitting a turning point. Recent developments, such as the company’s launch of its C3 Generative AI Product Suite, further signal that the rise of AI will soon translate into materially improved operating performance.

Still, as I have recommended previously, there’s no need to rush into AI shares. Slowly easing into a position is the better way to go.

That way, you can gain exposure to the increasingly likely chances that the “story” behind C3.ai plays out, while at the same minimize the sting of near-term volatility, as this company’s breakout will happen gradually, not suddenly.

In short, with the right approach, AI stock still has the potential to be a long-term winner for your portfolio.

AI stock earns a B rating in Portfolio Grader.

On the date of publication, Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.

The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.