Chapter 1: What are the current trends in AI investment for 2026?
Talks of an AI bubble are as prevalent as ever, but real world investors are still bullish. We're digging into the next phase of AI today on Motley Fool Money. Today is Tuesday, January 6th. Welcome to Motley Fool Money.
I'm your host, Emily Flippen, and today I'm joined by Fool analyst, Asit Sharma, and the head of AI here at The Motley Fool, Donato Riccio, to discuss the investor outlook for AI and 2026 report. So I have you both on today because The Fool recently published an interesting report around real-world AI usage, of which you two were obviously integral to its creation.
This report, which is called The Motley Fool's 2026 and AI Investor Outlook Report is available for free at fool.com backslash research backslash AI dash investor dash outlook for anyone who wants to read it. But don't worry, we do have that link in the show notes for easy access, so you don't have to memorize it.
But for anybody who can't read it or just hasn't yet, I'm really excited to dig into some of the findings here today on the Motley Fool Money podcast.
Chapter 2: How do real investors feel about AI stocks today?
And I want to start with what the report says about real-world investors and what they're doing with AI today. And then we'll move to where, Donato, you think the industry is heading. And and then wrap with Asit's framework for investing in AI, including where the opportunities may be the most ripe.
Now, The Motley Fool's 2026 AI Investor Outlook Report did survey around 2,600 American adults in November 2025, and the headline is pretty simple. Amongst people who already own AI stocks, 36% plan to increase their holdings, 57% plan to keep it the same, and only 7% plan to reduce.
Moreover, a whopping 62% of respondents said they're confident AI-heavy companies will deliver strong long-term returns. That number grows to 93% amongst those who already have exposure. The gist of this report is there's still a lot of excitement around AI, even with the hype. Now, Asit, I know there's always going to be biases in this type of self-reported data.
Chapter 3: What changes are expected in AI technology by 2026?
Those who are most excited about AI are probably also the ones who are most likely to respond to a survey about for instance. But when you see that people are largely holding or adding to AI in a world that continues to focus on the fact that we're in a, quote, AI bubble, what does that tell you?
Emily, I think it reflects a societal learning curve. I'd argue that most people and most investors are much more knowledgeable about the components of AI, machine learning, and generative AI versus a few years ago. I guess that's obvious. To evaluate businesses in this space, I've noticed that Most of us have acquired a vocabulary we didn't have in, say, 2022.
We're familiar with terms like GPUs, LLMs, inference, tokens, etc. I think investors have this broad enough understanding to evaluate what type of bubble we're in.
Chapter 4: How can investors mitigate risks in an AI-focused portfolio?
We should spot the average investor some credit here. I think the decision to be invested or to stay invested has more reasoning and rationale behind it than previous bubbles that come to mind. Along these lines, the mania aspect of this bubble appears comparatively smaller to me against historical bubbles.
I'm thinking about, let's say, the dot-com bubble in 1999, go all the way back to the tulip mania in the 18th century, 17th century in Holland. That doesn't mean that this bubble isn't going to pop or at least deflate a bit.
But investors seem to me like they're in this mode of evaluating the risks, the trade-offs, and they're more willing to demarcate their personal lines that go between investing and speculating. Alright, here's this paradoxical question, which you hinted at, Emily. This gets to the surprising results of our survey.
If you understand that we could be in a bubble, and you already have exposure to the upside potential of AI, and you understand that the market has appreciated for three straight years with a cumulative return of 78%, and you know that the S&P 500, which is driven by big tech, currently sits at all-time highs, Why would you be planning to add to your AI positions in 2026?"
Chapter 5: What specific companies are highlighted as investment opportunities?
To me, I think it says, number one, you've got an inherent belief that this technology is tied to the creation of value in the global economy, i.e., you believe it's for real. And number two, you think that some companies are going to continue to realize appreciable cash flows from selling either the development or the output of this technology. And you're also researching new opportunities.
You're attuned to valuation in the businesses you own and the ones you want to buy. And finally, you intend to be rational in your capital allocation. Or is that a hope of mine?
I think that's a fair read, Asit. One of the things that we don't get from the survey is how much exposure already exists. We talked to people who say they already have exposure, but in terms of a total portfolio, that exposure could be smaller than what somebody may want to allocate.
The intention to add may just be actually building out what would then be a full-size position to exposure to AI, however that's defined in 2026.
Chapter 6: How does the cost of AI models affect investment strategies?
But I also think, and this is maybe the irrational hope of mine, that anybody who answers this survey and says that they're planning on adding or maintaining their AI exposure is doing so with the awareness that I'm going to hold these companies for the extreme long term. So, yeah, maybe this is a bubble.
Maybe there are risks and we do have a crash, but that's okay because the companies I'm invested in have very real, appreciable cash flow. And I believe that a decade from now, even if there is a short pullback in share price of a company, they're going to be bigger, better, more important businesses in the future.
Maybe I'm giving too much credit here, but as a Motley Fool investor, that's where I hope we're going. Donato, I want to pass the mic to you because, obviously, you're the head of AI here at The Motley Fool. One of the things that I really liked about the report was that the optimism that Asit just mentioned and we talked about, it wasn't totally blind in this report.
When they asked about risks, the top two risks from respondents were things like data quality, security, as well as a sense of overvaluation in the sector. You're somebody who already spends all of your days living inside the world of AI, obviously. When you see this investor confidence shown in the report, is that matched by what you're seeing in terms of real-world adoption?
Chapter 7: What are the critical questions to ask when evaluating AI investments?
Or is Wall Street still early to the party?
So the short answer is that I think it matches. And we are currently in a healthier place compared to just six or nine months ago. Because at the beginning of 2025, as many others have started worrying about, is it a bubble? But the main indicator I monitor is pretty simple. So are people's expectations connected to how the technology actually works?
Because when the expectations disconnect from the fundamentals, that's when you get the bubble, right? So early last year, I saw this starting to go sideways because people were getting more and more excited about agents, which are that are able to perform more complex actions and go beyond just answering questions such as booking your flight or creating an act or managing your calendar.
So many people started calling 2025 the year of agents, but I like Andrew Capatti's framing better, which is that this is a decade of agents. because they are just getting started and this is an emerging technology.
Chapter 8: What long-term mindset should investors adopt for AI investments?
But at the time, the expectations were running way ahead of reality and people were imagining these autonomous entities that could do everything and run your business alone. So yes, agents work and they are the new disruptive technology that for now proved effective in very narrow scopes and controlled environments. Last year, I observed this gap between expectations and reality.
But then two things happened. So first, the sentiment cooled down a bit. The hype around agents got more measured. I think, in fact, we are starting to get a little bit past peak hype because people are getting more realistic now about what agents can do. But who knows what's going to happen tomorrow, right?
And the second thing is that the most important part is that the agents actually improved dramatically. The technology really caught up with some of these expectations. Not all of them, but I'd say enough that this gap narrowed. So, yeah, I say that we're in a healthier place. I like this direction.
The markets had reached new highs last year, but over the past couple of months, we've been pretty flat. And I think that's okay to give people and companies more time to pay to experiment. And when we look at actual adoption data in companies, it confers in this direction. So, the paid AI adoption across U.S. businesses increased a lot from 2023, it was just around 5%, to 44% in September 2025.
And if we look at revenue growth in AI companies, Anthropic reported 10X on their revenue two years in a row. Cursor, the AI coding tool, is in a similar situation. It went from $4 million last year to hitting $1 billion Analyzer revenue this year. I said this is not hype. There is real commercial traction in these tools and real adoption companies. People are finding real value in these tools.
When you ask Emily if the investor confidence is matched by adoption, I say yes. The data shows that companies are finding real value.
It's almost ironic that we talk about AI as a bubble today, when I think the skepticism around AI is probably the highest it's ever been. Unlike bubbles in the past, I think we as investors have a new level of awareness of things like the hype cycle. To your point, when things get separate, When hype separates from reality, that's when it creates a bubble.
But to your point, there is reality backing up a lot of this technology. And I love the fact that the survey shows that investors are still largely leaning in to the AI and adoption, but there's still that awareness, that cautious amount of optimism. Up next, we're going to be getting practical about 2026, including where the next wave of opportunities may show up. Stick with us.
Welcome back to Motley Fool Money. Today, we're discussing the AI Investor Outlook Report for 2026 and where AI technology may be headed. Donata, as head of AI here at The Fool, I'd love to dig in a little bit deeper to where you see AI going. Now, you said in this report that the right mental model is somewhere like three to five years in terms of the timeframe for investors in the sector.
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