Up 260% in 7 weeks, what's going on with Appen shares?

Appen Ltd (ASX: APX) shares have been on a meteoric rise, surging 260% higher in just seven weeks.

Shares in the language technology data company were swapping hands at 43 cents per share on July 29, their lowest point in months.

At the time of writing, the stock is fetching $1.55 apiece, more than 3.5 times above where it traded back then.

Let's dive into what's driving this massive rebound in this ASX tech stock.

Dramatic turnaround for Appen shares

The rally in Appen shares kicked off with a bang when the company released its quarterly update on 30 July.

Although quarterly revenue dipped 16% year over year to US$55 million, the figures weren't as bleak as they appeared.

The drop was largely due to the loss of a significant customer, Google.

However, excluding Google, the revenue story takes a sharp turn, with Appen reporting a 16% increase in revenue. It also clipped a US$600,000 profit before tax for the year, up from a deep loss the year prior.

CEO Ryan Kolln highlighted the company's potential in the generative artificial intelligence (AI) market.

Moreover, the tech rally in the US, driven by companies like NVIDIA Corporation (NASDAQ: NVDA) and OpenAI, has created a positive halo effect around AI-related stocks like Appen.

As my colleague Bernd reported, NVIDIA's recent surge and OpenAI's reported new funding round, valuing it at a staggering US$150 billion, have fueled optimism around the future of AI.

This could impact Appen shares.

What's next?

With Appen shares up so sharply, the big question now is whether this momentum can continue.

CEO Kolln certainly thinks so. He emphasised Appen's growing importance in the AI ecosystem, noting the company had become a "crucial source of data for many leading model builders".

Despite this renewed optimism however, analyst sentiment remains cautious.

According to CommSec, the consensus view rates Appen shares as a hold, with a mixed bag of one buy rating, three holds, and one sell.

While analysts seem to be taking a neutral stance, the market's enthusiasm for the stock suggests a different story.

Investors have also bought Appen shares after each momentary sell-off. Whilst there's no saying this trend will continue, it does show many are taking the company's valuations seriously.

Foolish takeaway

Appen shares have had a remarkable run in recent weeks, rising triple-digits from their late July lows.

They are also up 20% in the past year of trade and more than 70% in the past month.