3 Artificial Intelligence (AI) Trends to Watch in 2026 and How to Invest in Them | The Motley Fool

The last three years have been marked by the rapid development and deployment of new artificial intelligence technology. From the release of ChatGPT in late 2022 to today, large language models have seen significant improvements, driven by innovative training and model techniques, larger models and context windows, and advances in hardware capabilities. But based on comments and commitments from some of the largest AI companies in the world, there's still a long way to go. In 2026, we can expect many more advances in generative AI . Here are three of the biggest trends to watch, along with how investors can position their portfolios to capitalize on the continued opportunities in artificial intelligence. Image source: Getty Images. 1. Custom AI accelerators will take market share The four biggest hyperscalers have been developing their own custom silicon for years. Alphabet ( GOOG 0.43%) ( GOOGL 0.48%) has utilized its Tensor Processing Units (TPUs) for AI development for over a decade, and it's been offering them through Google Cloud since 2018. Likewise, Amazon launched its Inferentia chip (for inference ) in 2019 and Trainium (for AI training ) in 2021. Microsoft and Meta Platforms ( META +0.05%) make their own chips as well. There's a growing demand for these custom chips as they offer better price performance than Nvidia 's market-leading GPUs. The hyperscalers can acquire the chips for less, and they consume less power than GPUs. However, they're not able to run broad workloads like GPUs, making them only suitable for specific tasks. However, continued advancements in custom silicon have led an increasing number of AI developers to adopt these solutions. Anthropic is using Amazon's chips and plans to use Google's chips starting next year. OpenAI is using TPUs, and it's in talks with Amazon as well. Even Meta is reportedly in talks with Google to use TPUs, as the two look to port the PyTorch framework (the most widely used AI software framework) to its architecture. Alphabet stands out as a leader in the space as it's seen great results using TPUs in-house, and it's gaining traction with third parties. But investors should look one level deeper at the companies behind the designs: Broadcom ( AVGO +0.22%) and Marvell ( MRVL 0.96%). Broadcom designs Alphabet's TPUs, but Marvell may be the better stock to buy now based on valuation. It's behind the designs for Amazon and Microsoft's chips, which are also expected to see strong demand in the coming years. NASDAQ: MRVL Key Data Points 2. On-device artificial intelligence Most artificial intelligence applications make a call to a server to access a large language model. That can be slow and energy-intensive, and it requires an internet connection. One significant trend to watch in 2026 is the advancement of on-device generative AI capabilities, also known as edge AI. Apple ( AAPL +0.82%) is expected to deliver on its long-promised Siri revamp, featuring AI-powered improvements. Apple's on-device AI model, Apple Intelligence, will handle many new tasks and ensure data privacy. It may...

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