AI hallucinations are outputs that sound accurate and authoritative but are false or invented. This Arctic Wolf video explains what AI hallucinations are, why they happen, and what they mean for cybersecurity. They happen because of incomplete data, data bias, lack of context, and processing complexity. AI predicts from patterns and doesn’t check its answers against reality. In security, the consequences include hallucinated threat assessments, incorrect remediation recommendations, fabricated indicators of compromise, wasted time, and increased risk.