What happened

Shares of C3.ai (AI -4.39%) rallied out of the gate Friday, climbing as much as 7.6%. At 12:32 p.m. ET today, the stock was still up 4.2%.

The catalyst for the provider of enterprise artificial intelligence (AI) software were comments by an industry leader about the growing excitement for AI tools, specifically generative AI.

So what

At Nvidia's (NVDA -3.54%) GPU Technology Conference this week, CEO Jensen Huang said that AI had reached an inflection point with recent developments that made the technology both easy to use and easily accessible. "We're seeing an acceleration of demand for inference because of generative AI," Huang said. 

There's been a lot of buzz around generative AI, as the release of ChatGPT in November stoked the public's imagination. The AI-fueled chatbot demonstrates much more advanced conversational capabilities than were previously possible. Popularity skyrocketed soon after its release, with ChatGPT reaching 100 million users within two months. 

The news bodes well for C3.ai. Earlier this year, the company introduced a suite of products that integrate the latest innovations in generative AI and, more broadly, natural language processing.

The accompanying news release said, "The C3 Generative AI Product Suite integrates the latest AI capabilities from organizations such as OpenAI, [Alphabet's] Google, and academia, and the most advanced models, such as ChatGPT and GPT-3 into C3 AI's enterprise AI products."  

Now what

While it's easy to get caught up in all the hype, it's important to remember that its early days for generative AI. Sentiment can turn on a dime, and C3.ai still has to prove it can capitalize on the opportunity.

The company was forced to change its pricing strategy last year, moving from a subscription-based to a usage-based model. At the time, management noted that the existing model was not well suited to economic uncertainty. The jury is still out on whether this change will ultimately lead to success. 

Given the ongoing macroeconomic headwinds, investors should be cautious with C3.ai, and any investment should be a small part of a balanced portfolio.