This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
Artificial intelligence (AI) stocks have been on fire in recent years. Over the past three years alone, Nvidia (NASDAQ: NVDA) has soared by a staggering 1,180%, as of this writing. In other words, if you'd invested $1,000 in Nvidia just three years ago, you'd have nearly $13,000 by today.
However, some investors are concerned that the AI sector has become a bubble poised to burst. If that's the case, investing now could be a risky move. While nobody knows what lies ahead, here's where investors stand on the future of AI stocks.
Should you really invest right now?
Again, the future of any stock or industry is unknowable, at least to a degree. Even the experts can't say where AI will be in six months or a year, and that uncertainty can be daunting.
That said, an investment's long-term potential is far more important than any short-term volatility. So rather than asking whether an AI bubble is looming, the real question investors should ask is where AI will be in 10 or 20 years. And according to the majority of investors, the answer is promising.
Nearly two-thirds (62%) of American adults are confident that AI-focused companies will deliver strong long-term returns, according to The Motley Fool's 2026 AI Investor Outlook Report. Among those who are already investing in AI stocks, a whopping 93% believe in the technology's long-term potential.
But what if a bubble is around the corner? Experts emphasize that the earning potential could be worth the rough patches.
"For investors willing to weather near-term volatility, the AI transformation represents a once-in-a-generation opportunity to participate in technology that's restructuring how the world works," says Donato Riccio, Head of AI at The Motley Fool.
"Of course, we'll see peaks and troughs in AI earnings cycles," Asit Sharma, AI Stock Analyst at The Motley Fool, adds, "but the long-term potential of this market is still superior to almost any other current investment theme we can name."
The key to protecting your portfolio
While you may not be able to avoid short-term volatility, investing in quality stocks is crucial to reap the long-term rewards. And there are some investments that may be better poised for significant growth over time.
Specifically, Sharma recommends seeking out companies building the foundations of AI technology.
"For the biggest opportunities, look to smaller semiconductor and data center ecosystem players, such as data interconnect specialists, high-bandwidth memory providers, and cutting-edge data storage designers," he explains. "The 'best of breed' in these categories will likely outpace the market in the next three to five years."
Wherever you choose to buy, be sure you're researching the company's fundamentals rather than relying on hype. Even weak companies can appear to thrive when the entire industry is soaring, but those stocks will struggle to bounce back after a downturn. Healthy organizations, however, are far more likely to recover from even severe volatility.
Nobody can say where AI stocks will go in 2026. We could be headed for a bubble, or the industry may have much further to climb. However, by investing in the right stocks and staying focused on the long term, you can capitalize on AI's promising growth potential while still mitigating risks.
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
