I always thought the Blue AI here is meant to represent the idea of a perfect Ideal Self that Caine thought he needed to become before he could be loved. Caine internalized it when he consumed the Blue AI, and this is him shedding that idea as the first step of self-acceptance.
The thing about an Ideal Self, is that it's normal and fine to have one, but it needs to be realistically achievable. If you set your goals impossibly high, and believe that you'll never be complete or worthy of love until you reach them, then you're setting yourself up for a lot of frustration and pain. Worse, it leads you to believe that you should be superior to everyone else, which actively hinders your growth and damages your relationships with others.
I know some people wanted the Blue AI to be another sentient entity that "possessed" Caine during his worse moments and the secret evil, but i wanna say you misunderstood. The story was always meant to be about Caine. When we actually see the Blue AI, it's just this small blue orb. It has no face. It has no lines. It remains the same from its time of development, while Caine's made his own choices, and grew, and changed. Caine is so much more than the Blue AI because he became his own person a long time ago.

















