Stuffed animals that talk back. Chessboards with pieces that move on their own. And a chatty holographic fairy in a crystal ...

A wave of AI-powered children’s toys has hit shelves this holiday season, claiming to rely on sophisticated chatbots to animate interactive robots and stuffed animals that can converse with kids.

When it comes to kids toys, the real world and virtual worlds are coming together, whether it's action figures that appear in video games when placed on a console-connected "portal" (like Activision's ...