Dumplings, ice cubes and gummy bears — squishable ones, anyway — are some of the hottest toys of 2026.

Squishy toys have been around for years, but products such as NeeDoh, made by Massachusetts-based Schylling, have exploded in popularity this year, helped by their relatively low prices and social media appeal. 

U.S. sales of squishy toys reached about $297 million through June, quadrupling from a year earlier, Kristen McLean, vice president of client insights and the leader of market-research firm Circana’s Entertainment Knowledge Group, told CNBC.

Unit sales jumped nearly 200% to 58.6 million over the same period, according to McLean.

“While the price and the stores they are selling in make them widely available and accessible from a price perspective, the NeeDoh run in particular started on social media,” McLean said.

The combination of “fun colors, interesting packaging, stress relief and play” helped lay the viral foundation for broader adoption, she said. “They really managed to capture a moment in the zeitgeist.”

TikTok Shop has grown to represent 1% of total retail sales and 3% of e-commerce sales in just two years, according to Circana’s Social Commerce Tracking data, with toys, hobbies and collectibles ranking as the third-largest category on the platform.

Their relatively low prices could also make it easier for online attention to translate into purchases.

“Squishy toys are widely accessible and relatively inexpensive, making them an easy impulse purchase after consumers see them trending on social media,” said Loo Wee Teck, global insight manager for toys and games at market intelligence company Euromonitor International.

“Against a backdrop of economic uncertainty, rising stress and digital fatigue, consumers are increasingly drawn to products that offer simple moments of comfort and relaxation,” Loo said.

The flagship American Girl Place at Rockefeller Center in New York City feels frozen in time.

The air smells faintly of vanilla. Young girls dart between doll displays clutching miniature shirts and sequined shoes. Beneath glittering chandeliers, the brand’s iconic red boxes line shelves with museum-like precision. Blow dryers hum in the Doll Salon, and downstairs, pink-frosted cupcakes land on cafe tables before dolls sitting upright in their miniature highchairs.

“It feels timeless,” said Jamie Cygielman, global head of dolls for Mattel, the brand’s parent company.

And yet, behind the scenes, the business of American Girl dolls is not what it once was.

As American Girl turns 40, the brand is navigating more modern challenges: digital competition, shifting play patterns and an aging, more cost-conscious customer base.

“The anniversary is at precarious moment for American Girl and the whole doll industry,” said Jaime Katz, an analyst who covers Mattel for Morningstar. “Kids are more digital in play, and the [American Girl] brand has struggled.”

Around a decade ago, at its peak, American Girl was recording more than $600 million in annual sales. By 2023, annual sales had fallen to roughly $200 million — just a third of prior levels.

While American Girl has shrunk back considerably from the mid-2010s, the brand has more recently posted five consecutive quarters of sales growth — one of the few steady performers inside Mattel’s portfolio.

“Growing off a base that’s down more than 60% doesn’t mean the brand is back. It means it’s stabilizing,” Katz told CNBC.

Earlier this month, Mattel reported fourth-quarter sales of $1.77 billion, falling short of Wall Street expectations after holiday demand came in lighter than projected and heavier discounting weighed on margins. Earnings per share likewise fell short, and Mattel issued a lower-than-expect profit forecast for 2026.

Mattel shares have fallen roughly 19% since the Feb. 10 report and are down about 20% over the past year. Citi and JPMorgan downgraded the stock after the results, too.

“People are watching Mattel this year … waiting with baited breath, because they are spending a ton and it seems unlikely they will be bringing in big profits,” Katz said.

Even before the Covid pandemic forced American Girl to reduce its retail footprint from about 15 stores in 2019 to seven U.S. locations today, the brand faced mounting competition from lower-priced alternatives at big-box retailers like Target’s “Our Generation” line.

A traditional, 18-inch American Girl typically starts at $135, excluding accessories, which can cost as…

Lego is rebuilding how consumers engage with motorsport brick by brick.

In 2025, Lego kicked off a partnership with Formula 1 that brought officially licensed sets to global retail shelves and immersive experiences to races around the world. In the nearly year since launch, the collaboration has bolstered fan engagement for both brands, lead to promotional sales of Lego products and expanded the demographic reach for the toy company and the racing organization.

In August, Lego CEO Niels Christiansen touted the company’s Formula 1 sets as one of the innovations that fueled record first-half revenue and operating profit. The company, which is privately held, reported a 12% year-over-year revenue bump to 34.6 billion Danish kroner, or $5.4 billion, for the first six months of 2025.

“It is a massively growing fan base,” Julia Goldin, chief product and marketing officer at Lego, told CNBC. “It is the biggest motorsport now in terms of its fandom. … We felt that we could really tap into that and deliver something very unique.”

With Formula 1, Lego isn’t just leveraging an existing fandom, it’s expanding it, bringing underserved demographics into the world of racing and engaging new customers.

“Lego has a great reputation for picking out the right trends to become a part of, and motorsports in recent years has been on a real upswing,” said James Zahn, editor in chief of The Toy Book.

“F1, as we’ve seen, has just become a cultural juggernaut where it is attracting an audience that isn’t your typical motorsports fan,” he said. “It seems to transcend ages and interests.”

ESPN, which broadcast the 2025 F1 season in the U.S., reported record viewership numbers for the races. The Disney-owned sports network saw an average of 1.3 million viewers across its stations and platforms through the majority of the racing calendar. That was up from a previous record of 1.21 million viewers set in 2022 and up from just 554,000 in 2018, the first year of ESPN’s broadcasting deal with F1.

Next year, U.S. broadcasting rights move to Apple TV following the success of the Apple-distributed “F1: The Movie,” which hit cinemas in June.

In expanding its catalog of products — introducing meticulously designed F1 car brick sets, complete with team-accurate liveries — Lego has built gateways into the brand for newcomers.

“At the heart of it was understanding our audience’s passion points,” Goldin said. “When we choose to go into a partnership, could we see ourselves doing something unique that would offer real value … we felt like we had a real opportunity to deliver experiences that they would really love.”

The F1 portfolio included products…

It seems everyone is talking about AI these days — even Ultraman. 

When asked if investors should be worried about an AI bubble, the new second generation CocoMate AI-powered plush toy by Chinese company Haivivi warned about the dangers of speculation in AI stocks.

“The AI market has been on a wild ride lately,” the toy based on the Ultraman character cautioned. “If investors pour too much money into unproven ideas without solid fundamentals, it could lead to a bubble burst!”

China has long been a dominant manufacturer in the global toy industry. So pushing into AI playthings is a natural step, analysts say. The Xi Jinping administration, on a campaign to turn China into an AI powerhouse, has been directing companies and consumers to integrate AI into their businesses and lives. 

Haivivi is one of 1,500 companies in China’s $4 billion dollar AI toy industry. 

Another is Chengdu-based startup Chongker, which invented an AI cat as a comfort animal. The artificial feline uses voice recognition and banked memories in the cloud to adjust its behavior to its owner’s needs.

“Some people like the cat to be more, maybe noisy or naughty, right? And some people just need the quiet one. So it will learn what kind of thing you like,” Sean Xu, director of AI products with Chongker, told CNBC. 

Xu said the company added a special feature it believes will help the pet build a strong bond with its owner— a simulated heart beat.

The electronic pulse is triggered after holding the AI pet tightly for 10 seconds. Xu says the feeling makes one “calm down.”

If a potential shopper prefers a high energy toy, Loona the AI puppy by Keyi Tech uses cameras and lasers to zip around its new home.

The AI helps Loona figure out the layout of its owner’s pad. The robot pet can also recognize up to five family members and respond to each one individually.

Despite the fascination with the intelligent toys, the gadgets come with risks, especially when it comes to impressionable young minds. 

New research by U.S. consumer safety-focused non-profit Public Interest Research Group suggests the effects of AI toys on young children are still far from understood. PIRG’s studies found some toys shared inappropriate and dangerous information with users, and the group raised concerns about privacy. 

“A lot of these toys are using large language models,” Beijing-based tech consultant Tom van Dillen explained. “Sometimes the models can hallucinate. Now toy manufacturers are doing a lot to create guardrails.”

For Haivivi’s CocoMate plush toys including Ultraman, parents can access a transcript of their children’s conversations with the AI toy on their phone. 

When asked by CNBC if succumbing to pressure by other students at…

British toybrand Jellycat, loved by Gen Z globally, more than doubled its profit in 2024 on the back of a “kidult” driven craze for toys as more adults turn to soft toys for comfort.

Jellycat, a private company founded by Thomas Gatacre in London in 1999, is popular for selling huggable soft toys from its £18 ($24) Bashful Beige Bunny to its £275 Amuseables Nordic Spruce Christmas Tree. The firm saw “rapid growth” in 2024, according to financial reports shared with CNBC.

The company, owned by Jelly Holdings, saw revenue rise 66% to £333 million ($449 million) for the year ending December 31, up from £200 million in 2023. Its profit before tax more than doubled to £139 million, up from £67 million the prior year. It’s planning to pay dividends of £110 million to its owners.

The toymaker sells its “jellies” in 8,000 shops across 80 countries, including at high-end department stores like Selfridges and Harrods in London and Galeries Lafayette in Paris. It said its saw the most growth in demand for its soft toys in Europe, China and the U.S.

“Everyone seems to be loving them: from children to kidults and Gen Z, all the way through the generations to parents, grandparents and beyond,” the company said in the report.

Its also seeing popularity across its new “Jellycat Experiences” held in stores such as the Jellycat Fish & Chips in Selfridges and Jellycat Patisserie in Galeries Lafayette. Other hot items include accessories like bag charms and handbags.

The company’s growth can be traced to growing adult demand for kid toys with the $30 Labubu doll becoming a viral TikTok sensation earlier this year. It’s gained traction as an international status symbol with both adults and kids buying into the hype around the tiny stuffed animal toys.

On TikTok, Jellycat boasts 2.1 million followers at present while 20 million posts sit under the hashtag #jellycathaul. In viral videos, young adults rave over their $20 dollar soft toys, while some show off massive collections of jellies stuffed on their shelves.

Toy industry research group Circana found that adults are driving the toy market in the U.S, with sales rising 18% this year, across customers aged 18 and older. Adults spent $1.8 billion on toys in the first quarter of this year, accounting for the highest spending across all age groups.

In 2024. sales were being driven by “nostalgic” kidults seeking out comfort amid economic and geopolitical turmoil globally, Circana said.

“By tapping into the joy economy, toys are increasingly being recognised for their positive mental health benefits as they spark nostalgia and bring escapism from global turmoil into consumers’ lives,” Melissa Symonds, UK toys director for Circana said at the time.