The 2 Biggest Risks AI Stock Investors Fear Most (It's Not What You'd Expect)

• Investors are acrophobic astir the prime of the information utilized by artificial quality (AI) companies and their information information measures.

• Valuation hazard is different imaginable issue, particularly with immoderate AI stocks trading astatine precocious P/E ratios.

• Don't fto costly valuations deter you from investing -- galore AI companies person beardown businesses, delivering grounds revenue.

• 10 stocks we similar amended than Nvidia ›

Despite speech of a imaginable bubble, investors are mostly bullish connected artificial quality (AI) technology. Nearly two-thirds (62%) of those surveyed for The Motley Fool's 2026 AI Investor Outlook Report said they're assured companies investing heavy successful AI volition present strong, semipermanent returns. Those who already ain AI stocks and AI ETFs are adjacent much confident, with 93% expecting beardown returns from AI companies.

However, investors person respective concerns astir investing successful AI companies. There are 2 issues, successful particular, that they fearfulness the most.

The biggest hazard associated with AI investing is the information prime and information of AI companies, with 49% of investors mentioning it arsenic a concern. This is simply a multifaceted contented that encompasses however companies bid their AI models and what they bash with their data.

AI models are lone arsenic close arsenic the information utilized to bid them. A exemplary trained connected low-quality information is much apt to nutrient AI hallucinations -- confident-sounding responses that are really inaccurate. If you've utilized AI tools much, you've astir apt experienced this firsthand. AI hallucinations tin person superior consequences, peculiarly arsenic much companies trust connected AI successful their day-to-day operations.

AI companies negociate monolithic amounts of data, including their grooming information and accusation from idiosyncratic interactions. There are privateness concerns regarding however these companies store and usage this data, and it besides makes them a people for hackers.

Tech valuations person gotten a batch of attraction recently, and 43% of investors expressed interest astir the hazard of AI companies being overvalued.

The numbers would look to carnivore this out. The Nasdaq-100, a tech-heavy index, has a price-to-earnings (P/E) ratio of 38 (as of Jan. 9). Looking astatine a fewer of the large names, Nvidia (NASDAQ: NVDA) presently trades astatine 46 times trailing earnings, Microsoft astatine 34 times trailing earnings, and Palantir Technologies astatine a staggering 415 times trailing earnings.

Keep successful caput that galore AI companies are innovative, rapidly increasing businesses, which is wherefore they commercialized astatine higher valuations. If you conscionable cheque Nvidia's P/E ratio, it looks expensive. But it's besides a institution that has delivered 12 consecutive quarters of gross growth, astir precocious reaching a grounds precocious of $57 billion, and that has $500 cardinal successful orders for its Blackwell and Rubin systems done the extremity of 2026.