Talk of artificial intelligence (AI) is everywhere these days. OpenAI's ChatGPT has taken the world by storm with its ability to generate surprisingly well-written, high-quality responses to questions and prompts. Other AI technologies for generating images, audio, and video are also making incredible leaps forward at a dizzying pace. The good news for investors is that the AI revolution is still very much in its infancy, and putting money behind top AI players could have tremendous payoffs.

In a showdown between tech giant Amazon (AMZN -0.29%) and smaller software and services specialist C3.ai (AI -0.40%), which stock is better suited to deliver great returns? Read on for dueling bull cases on these two companies and a final determination on which one deserves your investment dollars.

A robotic hand touching a stack of coins.

Image source: Getty Images.

The case for Amazon

Amazon is already one of the world's strongest companies, and there's a good chance it will wind up one of the AI revolution's biggest winners. While it isn't currently getting as much attention as Microsoft and some other big players in the AI space, that could change before long.

In April, the company announced Amazon Bedrock -- its first generative AI platform. Bedrock will provide users with tools and computing resources to create their own generative AI applications. Bedrock is being integrated into Amazon Web Services (AWS) and should help the company maintain a forefront position in the cloud infrastructure space. As the leading cloud infrastructure provider, Amazon has top resources and access to tons of valuable data that can be used to feed and inform AI systems. The company has also developed its own semiconductors for AI applications.

Advances in AI and robotics technologies also have the potential to transform the company's e-commerce unit. While online retail has historically been a relatively low-margin business due to high logistics costs, increased automation will likely help Amazon continue to improve the segment's profitability over time.

Given the company's current market share and infrastructure advantages, AI-powered automation of warehouse and delivery operations will almost certainly lead to substantial margin improvements for the e-commerce segment.

AI technologies will likely continue to deliver improvements to the consumer-facing marketplace and digital ads business as well. With macroeconomic conditions currently pressuring the company's online retail business, the market broadly seems to be underestimating Amazon's long-term opportunities in e-commerce.

With the stock still down roughly 44% from its high, Amazon presents appealing value for investors seeking to benefit from the rise of AI. The company already enjoys leading positions in key industries, and AI technologies will likely benefit almost all aspects of its business.

The case for C3.ai

Over the last couple of months, C3.ai has become one of the most controversial, hotly contested names in the AI stock space. While its share price is still up roughly 60% year to date, it took a big hit after short-seller Kerrisdale Capital published an open letter alleging that the company had been using misleading accounting practices and using billed receivables to bump up its reported revenue.

Given that revenue actually fell 4.4% year over year in the company's last reported quarter and the business posted a net loss of roughly $63.2 million in the period, it's clear that C3.ai is a high-risk stock. But there are potential scenarios in which it could prove its doubters wrong and go on to post stellar returns.

While the company has a highly growth-dependent valuation, C3.ai's roughly $2 billion market capitalization also leaves the door open for explosive growth if it can deliver on its promises. At the end of its last reported quarter, the company had a net cash position of approximately $790 million, and it has the option of raising funds through new share offerings if needed.

C3.ai has scored wins with big customers, including Baker Hughes, Shell, and the U.S. Air Force, and business performance could take a big step forward in its current fiscal year. Management expects to post sales growth of roughly 30% and shift into profitability on a non-GAAP (adjusted) basis. The company will also be rolling out new generative AI features and services.

It might be a long shot, but C3.ai's generative AI products and features could make waves, similar to OpenAI's ChatGPT. OpenAI was hardly a household name before ChatGPT hit the market and became an overnight sensation, but the success of its generative AI technology took the world by storm and quickly attracted a $10 billion investment from Microsoft. Investors shouldn't treat it as likely, given there's little visibility right now, but there's at least a possibility that C3.ai will see significant success with its generative AI technologies.

This AI stock showdown has a clear winner

While C3.ai's much smaller market capitalization potentially opens the door to much more explosive growth, the business's outlook is highly speculative, and there can be little doubt that Amazon is the better company. C3.ai stock might be worth a flyer for investors with very high risk tolerance, but Amazon's overall risk-reward profile is much more attractive.