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Those waiting for the artificial intelligence bubble to pop have been let down this earnings season.

In the latest sign that AI exuberance is alive and well in markets, Arm Holdings (ARM) stock has surged more than 70% in the last five days of trading after topping Wall Street's earnings estimates on Feb. 7.

And, perhaps most importantly, the chipmaker attributed its better-than-expected revenue forecast to artificial intelligence.

"When you think about artificial general intelligence, that's going to drive the need for more compute in a way that we've never seen before," Arm CEO Rene Haas told investors on the company's earnings call. "So as good as the last couple of quarters were, we're just at the beginning."

Arm soared nearly 50% in the next day of trading.

Shares at one point doubled from their pre-earnings price before a hotter-than-expected inflation report tempered the recent risk-on narrative in markets. Amid a broader market sell-off, Arm shares tumbled nearly 20% on Tuesday.

And while investors are buying the potential benefits, Wall Street is a bit more cautious on how the disruptive technology fully contributes to earnings growth for Arm moving forward.

Needham & Company analyst Charles Shi told Yahoo Finance Live that the firm isn't even sure Arm is that much of an AI play, with its current exposure to generative AI "quite small."

"It remains to be seen whether they can actually benefit from generative AI going into the future," Shi said.

This has become a prevailing theme among other popular AI trades like C3.ai (AI) and Palantir (PLTR). Wall Street wants to see further actual results and investors just want to hear more AI mentions.

As Shi pointed out, a company with even the slightest sprinkle of generative AI sends investors into a frenzy and valuations sky-high. Additionally, some Wall Street analysts have also noted that since only around 10% of Arm's outstanding shares are publicly traded — the rest is controlled by SoftBank — volatility in the name is to be expected.

And this also underscores the fact that investors may only have a vague idea what these companies even do. Arm, for its part, is on the ground floor of technological developments as it produces instruction sets to help chips like those made by Nvidia (NVDA), AMD (AMD), and just about every other major industry player operate.

But the Arm stock story remains largely a sign that investors are still following a familiar playbook for the AI trade — a company surprises Wall Street expectations for future revenues and attributes this beat to the disruptive technology.

The playbook goes back to last May, when Nvidia issued revenue guidance that topped Street expectations by about 53%.

And since then, investors have simply lowered the bar on what level of AI promise they're willing to pay up for.

For instance, Arm projected revenue in the current quarter to hit $850 million to $900 million, 16% above Wall Street's estimates for $778 million. An impressive forecast raise, but nowhere near Nvidia's massive call last May.

Yahoo Finance anchor Julie Hyman contributed reporting to this story.

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