Large Language Models (LLMs): Definition, How They Work, Types

What Are Large Language Models (LLMs)?

By Kristi Waterworth – Updated Nov 5, 2025 at 10:49 AM EST

Key Points

LLMs are AI trained to generate text, crucial for various applications like chatbots.
Training involves analyzing vast text data to learn language patterns and context.
Concerns exist over copyright issues and the accuracy of LLM outputs, impacting use.
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The world seems to have been taken by storm by artificial intelligence tools that can write emails, create art, and perform other complex tasks. One type of tool, large language models, learns how to create sentences that can be used in myriad ways.

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Infographic defining large language models — Image source: The Motley Fool

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Machine Learning

Machine learning is a technique by which artificial intelligence programs are trained.

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Hallucinations

Another huge concern for users and owners of LLMs is hallucinations. A hallucination occurs when an LLM gives a wrong answer to a user but with extreme confidence. Instead of simply saying it doesn't know, an LLM will give an answer it believes is statistically likely to be correct, even if it makes absolutely no sense.

This doesn't happen all the time, of course, but it happens often enough that there is a great deal of concern with trust in LLMs and their outputs. Many people have also noticed that they're terrible with numbers, often being unable to even count the words in their own output.

Of course, accuracy, hallucinations, and mathematical ability will vary between LLMs. Some models do much better than others, but they're all prone to problems of this nature since they weren't trained to fully understand what they're outputting, only what is statistically likely to make sense as a sentence in the context given.

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About the Author

Kristi Waterworth has been a contributing real estate and financial expert at The Motley Fool, covering real estate, investing, and personal finance topics, since 2020. Kristi has been interviewed by various TV media outlets and podcasts for her real estate investing expertise – from residential real estate to digital real estate and everything in between. Kristi’s journalist career spans over 25 years, and she has written about real estate investing, homeownership, and home construction specifically for the last decade. She was also previously a licensed Realtor and general building contractor before the Great Recession and housing market collapse. She holds a bachelor’s degree in American history from Columbia College in Missouri.

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