As a technology, the consumer use of the Internet is entering its fourth decade. And over the past forty odd years, it has evolved quite a bit. If you're old enough, you'd remember that connecting to the Internet in the 1990s and the early 2000s required using a dialup modem with its familiar tune of signals being sent to a network to establish a connection.
The era of broadband, which came roughly around the same time as the smartphone, and the growth in WiFi devices marked the first major shift in internet use. Consumers were no longer limited either to their desks or to slow speeds to access the web, and as a result, the kinds of applications and data that could be used grew exponentially. This growth came a little while before 3G internet smartphones provided high speed internet right into a consumer's hands, and the subsequent proliferation of dongles enabled anyone with a laptop to access the Internet as long as there was a supportive telecommunications tower in sight.
Settling into the 2020s, it's all about two main technologies in the Internet scene. These are fifth generation (5G) telecommunications networks and low Earth orbit (LEO) internet satellites. With the latter, you can access the net anywhere on the planet as long as there are satellites orbiting and you have the right equipment such as a dish. With the former, the opportunity for a multi billion dollar industry is at the doorstep of countless firms.
This industry is the Internet of Things (IoT) industry. Starting off with the basics, the global IoT industry was worth $399 billion in 2022 and will grow to be worth $486 billion in 2023. From then until 2027, the sector is expected to grow at a whopping compounded annual growth rate (CAGR) of 21.4% to be worth an estimated $1 trillion by the end of the forecast period according to research from The Business Research Company. The research firm adds that Asia Pacific was the largest segment of the IoT market - unsurprising as we'll find out later when we delve deeper into its myriad of use cases. The Business Research Company adds that automotive use is a major industry to utilize IoT gadgets, and collectively the gadgets will provide companies with vast amounts of data to sift through to generate analytical insights.
One key sector that is vastly expected to benefit from IoT devices is the industrial segment. This area involves using machines to manufacture products on a large scale, and the use of IoT gadgets enables manufacturing managers to catch errors, consolidate and gather new data, and ensure real time monitoring of the factory line. Therefore, it's unsurprising that the industrial Internet of Things industry is quite lucrative. A research report from Grand View Research shows that this area was worth $321 billion in 2022 and will grow at a CAGR of 23.2% from this year until the end of the decade to be worth $1.6 trillion. Within industrial IoT use, the manufacturing segment commanded an 18% market share in 2022 and will continue to be the largest portion moving forward. In terms of growth rate, the logistics segment is anticipated to outpace the broader market and exhibit a CAGR of 24%.
Yet, these estimates are only representative of what money the IoT companies will make. But what about the value they will generate? On this front, McKinsey has some rather stunning estimates. It believes that by 2030, IoT could enable users to deliver an absolute eye popping $12.6 trillion in value - nearly ten times the revenue that IoT companies will generate according to some estimates. The factory segment will account for 26% of this value generation, and healthcare use is expected to come in second place at a best case 14% share. Additionally, and as is the case with most high technology industries (another example being biotechnology), the developed world is estimated to hold the lion's share (55%) of this value.
Rounding off our analysis by taking a look at the situation on the ground, management of smart lighting and other equipment maker Acuity Brands, Inc. (NYSE:AYI) shared during its second quarter of 2023 earnings conference:
With our product vitality and service efforts, we make products that deserve to be chosen and our independent sales agents ensure that they are chosen. Product vitality is driving success across our portfolio and during NEXT 23, we introduced several new products. I want to highlight a couple here. The first was the new nLight AIR System Input Device. This is an indoor controller that can be used in multiple spaces, including office, commercial and retail. The device converts analog outputs to wireless broadcast to control intelligent luminaires. This reduces the need for complex wiring solutions during installation and reduces the associated cost for the customer. The second was the nLight AIR rPOD Micro. This is a battery-powered wall switch that can be used as a traditional wall switch or as a remote, providing control from anywhere within a build space.
With these details in mind, let's take a look at hot IoT stocks finding favor from billionaires, out of which the top ones are DexCom, Inc. (NASDAQ:DXCM), Acuity Brands, Inc. (NYSE:AYI), and NXP Semiconductors N.V. (NASDAQ:NXPI).
10 Internet of Things (IoT) Stocks Billionaires Are Loading Up On
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Our Methodology
To compile our list of the list of internet of things (IoT) stocks that billionaires are buying, we first made a list of 36 IoT companies ranging from those that make the IoT devices or their hardware and also those that provide a platform to use the data from the gadgets. Then, the number of billionaire investors that had held their shares as of Q1 2023 was determined, and the billionaires' top IoT stock picks are listed below.
10 Internet of Things (IoT) Stocks Billionaires Are Loading Up On
Belden Inc. (NYSE:BDC) makes and sells connectivity products to a variety of industries such as automation, security, and transport. The firm's products allow for data center operations, machine connectivity, power control, and sensor automation.
As of Q1 2023, 25 of the 943 hedge funds part of Insider Monkey's database had bought a stake in Belden Inc. (NYSE:BDC). Out of these, the firm's largest investor is Richard S. Pzena's Pzena Investment Management with a $72 million investment.
Belden Inc. (NYSE:BDC) joins Acuity Brands, Inc. (NYSE:AYI), DexCom, Inc. (NASDAQ:DXCM), and NXP Semiconductors N.V. (NASDAQ:NXPI) in our list of the best IoT stocks being bought by billionaires.
Johnson Controls International plc (NYSE:JCI) is an industrial equipment maker based in Cork, Ireland. The firm provides connected building management, fire control, and other products.
41 of the 943 hedge funds studied by Insider Monkey for their first quarter of 2023 shareholdings had bought the company's shares. Billionaire Ken Fisher's Fisher Asset Management is Johnson Controls International plc (NYSE:JCI)'s largest hedge fund investor since it owns 11 million shares that are worth $682 million.
T-Mobile US, Inc. (NASDAQ:TMUS) is a telecommunications carrier. Due to its investments in 5G connectivity infrastructure, it sits at the heart of the IoT industry by providing the products with a connectivity platform.
After digging through 943 hedge funds for their March quarter of 2023 investments, Insider Monkey discovered that 89 had invested in T-Mobile US, Inc. (NASDAQ:TMUS). The firm's largest shareholder in our database is the legendary Warren Buffett's Berkshire Hathaway with a $759 million stake.
While generally thought of as a design firm, Autodesk, Inc. (NASDAQ:ADSK) is a crucial player in the enterprise IoT market since it enables customers to consolidate their data under a single platform to generate analytics.
Insider Monkey's March quarter of 2023 survey covering 943 hedge funds revealed that 57 had bought the firm's shares. Autodesk, Inc. (NASDAQ:ADSK)'s largest hedge fund investor is Ian Simm's Impax Asset Management with a $253 million investment.
6. International Business Machines Corporation (NYSE:IBM)
Number of Billionaire Investors: 9
Another key player in the IoT analytics market is International Business Machines Corporation (NYSE:IBM). Its platform enables customers to integrate up to five hundred devices under a single roof for free to manage their insights and inputs.
49 of the 943 hedge funds part of Insider Monkey's database had invested in International Business Machines Corporation (NYSE:IBM) during Q1 2023. The firm's largest investor is Peter Rathjens, Bruce Clarke, and John Campbell's Arrowstreet Capital with a $673 million stake.
DexCom, Inc. (NASDAQ:DXCM), International Business Machines Corporation (NYSE:IBM), Acuity Brands, Inc. (NYSE:AYI), and NXP Semiconductors N.V. (NASDAQ:NXPI) are some favorite IoT stocks among billionaires.
