Do LEDs generate heat?

Yes, they do generate some heat, but not as much as incandescent sources.

One of the core benefits of LED light sources is that they create a cool beam of light. However, they do produce waste heat within the LED during conversion of electricity into light, and within the overall system. This heat must be handled properly to maximize fixture performance and avoid damage to the LEDs. Well-designed luminaires include carefully engineered heat sinks that draw heat away from the LEDs and dissipate it into the air surrounding the fixture housing. LEDs used in luminaires need proper thermal designs to ensure that the luminaire will have the lumen output and efficacy promised, and that it will meet these claims over the long lifetime of the luminaire.