In this piece, we will take a look at 12 of the best Internet of Things (IoT) stocks to buy. For more IoT stocks, head on over to 5 Internet of Things (IoT) Stocks To Buy.
In the last several decades, technology has undergone significant evolution. It's not just computers and smartphones that are now connected to the internet. Everyday items like light fixtures, televisions, large household appliances, vehicles, and even doorbells are becoming part of the online network. The Internet of Things (IoT) is the term used to describe this network of devices and objects that communicate with one another through connections to data centers. In reality, smart devices like digital wristwatches, automotive alarms, and synchronized traffic signals have been in existence for many years. However, IoT introduces a more widespread presence of such smart devices with enhanced connectivity and real-time data collection capabilities. Over the past few years, the IoT industry has made significant progress, transitioning from a niche area in the tech world to a mainstream concept recognized by the global business community, with projections suggesting that the global count of IoT devices will approach nearly 30 billion by the year 2030.
A sector with high expectations for IoT device benefits is the industrial domain. This field revolves around the utilization of machinery for large-scale manufacturing. IoT devices facilitate tasks such as error detection, data consolidation, information gathering, and real-time monitoring of factory production lines for manufacturing managers. According to a research report by Grand View Research, the industrial Internet of Things (IoT) sector had a value of $321 billion in 2022 and is projected to experience a compound annual growth rate (CAGR) of 23.2% from this year until the end of the decade, reaching a total worth of $1.6 trillion. In the realm of industrial IoT applications, the manufacturing segment dominated with an 18% market share in 2022 and is poised to remain the largest segment in the foreseeable future. Furthermore, the logistics segment is expected to surpass the overall market growth rate, with an anticipated CAGR of 24%.
Advancements in technology have led to a decrease in component costs, promoting the widespread adoption of IoT endpoints across various industries. One example of this is the commercialization of 5G technology, which has expanded connectivity and accelerated the deployment of cellular IoT modules, particularly in the automotive sector. Furthermore, IoT applications extend beyond residential automation. They find extensive use in areas like smart agriculture, where precision farming systems leverage specialized sensors to monitor fields, crops, and automate precise irrigation and fertilization processes, contributing to sustainable food production. The growing presence of IoT in multiple aspects of our lives brings data together to enhance infrastructure, public utilities, and services, ultimately facilitating the development of smart cities.
With these details in mind, let's take a look at some of the best IoT stocks that dominate the market, out of which the top include QUALCOMM Incorporated (NASDAQ:QCOM), Intel Corporation (NASDAQ:INTC), Microsoft Corporation (NASDAQ:MSFT), and Amazon.com, Inc. (NASDAQ:AMZN).
Best Internet-of-Things (IoT) Stocks to Buy
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Our Methodology
To create our selection of the best Internet of Things (IoT) stocks for investment, we began by assembling a roster of IoT companies. This roster encompassed businesses involved in IoT device manufacturing, hardware production, as well as those offering platforms for data utilization from these devices. Subsequently, we identified the number of hedge funds that retained these stocks in their portfolios as of Q2 2023.
Belden Inc. (NYSE:BDC), an American enterprise, specializes in the production of networking, connectivity, and cable solutions. The company is dedicated to the design, manufacturing, and promotion of signal transmission products tailored for rigorous and demanding applications.
Belden Inc. (NYSE:BDC) released an update on its third-quarter 2023 financial performance on October 12. The company now anticipates third-quarter revenues to hover around $625 million, a deviation from the previous projection of $675 million to $690 million. This adjustment in forecasts is a result of weaker-than-expected demand in both segments. Regarding GAAP EPS, the new estimate falls within the range of $1.67 to $1.69, a notable shift from the initial estimate of $1.40 to $1.50. The change is mainly attributed to a gain realized from the sale of assets.
As of Q2 2023, 26 of the 910 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 $66.44 million investment.
Just like QUALCOMM Incorporated (NASDAQ:QCOM), Intel Corporation (NASDAQ:INTC), Microsoft Corporation (NASDAQ:MSFT), and Amazon.com, Inc. (NASDAQ:AMZN), Belden Inc. (NYSE:BDC) ranks as one of the best IoT stocks to invest in.
Alarm.com Holdings, Inc. (NASDAQ:ALRM) is an American technology company specializing in cloud-based services tailored for remote control, home automation, and monitoring. Their monitoring services encompass various aspects and can even involve contractual agreements with third-party providers, such as ADT.
In August, Alarm.com Holdings, Inc. (NASDAQ:ALRM) disclosed its second-quarter financial results, reporting a net income of $15.8 million. The company, based in Tysons, Virginia, achieved earnings of $0.30 per share. After adjusting for one-time gains and costs, the earnings amounted to $0.49 per share. Notably, the company's second-quarter revenue reached $223.9 million, surpassing the expectations of Wall Street analysts. Alarm.com Holdings, Inc. (NASDAQ:ALRM) has also provided its full-year earnings outlook, expecting earnings in the range of $1.69 to $1.73 per share, along with revenue projected to fall within the range of $872.3 million to $887.7 million.
At the end of the second quarter of 2023, 26 hedge funds in the database of Insider Monkey held stakes worth $112.7 million in Alarm.com Holdings, Inc. (NASDAQ:ALRM), compared to 28 in the previous quarter worth $114.7 million.
10. International Business Machines Corporation (NYSE:IBM)
Number of Hedge Fund Holders: 51
The International Business Machines Corporation (NYSE:IBM), sometimes referred to as "Big Blue," is a prominent American multinational technology firm with its headquarters situated in Armonk, New York. The company is renowned for its extensive range of hardware and software offerings, encompassing computers, servers, storage systems, and networking equipment. In addition to its product line, International Business Machines Corporation (NYSE:IBM) provides a spectrum of consulting, technology, and business services, featuring cloud computing, Internet of Things (IoT), data analytics, and artificial intelligence (AI).
In August, International Business Machines Corporation (NYSE:IBM) made an announcement regarding the successful completion of its acquisition of Apptio Inc. This merger united Apptio's top-tier FinOps solutions, which include ApptioOne, Cloudability, and Targetprocess, with IBM's automation portfolio featuring Turbonomic, AIOps, and Instana. This integration was aimed at providing clients with a "virtual command center" to efficiently manage, optimize, and automate their technology spending decisions. Furthermore, recognizing the significance of AI and foundational models to clients and partners, International Business Machines Corporation (NYSE:IBM) intends to enhance its WatsonX AI and data platform by incorporating Apptio's substantial pool of anonymized IT spending data, which amounts to $450 billion.
Of the 910 hedge funds in Insider Monkey’s database at the end of Q2 2023, 51 hedge funds owned stakes in International Business Machines Corporation (NYSE:IBM), up from 49 a quarter earlier. These stakes have a collective value of roughly $814 million.
Cisco Systems, Inc. (NASDAQ:CSCO), commonly referred to as Cisco, is a prominent multinational digital communications technology corporation with its headquarters in San Jose, California, USA. Cisco offers a wide range of IT products and services that encompass five significant technology domains: Networking (encompassing Ethernet, optical, wireless, and mobility solutions), Security, Collaboration (covering voice, video, and data communication), Data Center, and the Internet of Things.
In the fourth quarter of 2023, Cisco Systems, Inc. (NASDAQ:CSCO) distributed $1.6 billion to its shareholders in the form of dividends. The company has maintained a record of increasing its dividends for the past 16 years. As of October 29, Cisco's quarterly dividend stands at $0.39 per share, providing a current dividend yield of 3.05%.
During Q2 2023, 55 out of the 910 hedge funds surveyed by Insider Monkey held a stake in Cisco Systems, Inc. (NASDAQ:CSCO). Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital is the biggest investor among these, owning 20 million shares that are worth $1 billion.
DexCom, Inc. (NASDAQ:DXCM) is a company specializing in the development, manufacturing, production, and distribution of continuous glucose monitoring (CGM) systems designed for effective diabetes management. This CGM system utilizes Internet of Things (IoT) technology, encompassing a sensor device and a back-end system to provide real-time data on glucose levels, body temperature, and contextual information in a user-friendly format. These insights are valuable for both patients and healthcare professionals.
DXCM shares surged following the company's earnings report on October 27, which indicated that the market for "continuous glucose monitoring devices" remains unaffected by the adoption of Ozempic, and this trend may persist. Sales experienced a robust 26% year-over-year growth, reaching $975 million, surpassing the estimated $940 million. Additionally, profit margins expanded at a rate exceeding expectations, resulting in earnings of $0.50 per share, well above the projected $0.34.
58 out of the 910 hedge funds part of Insider Monkey’s Q2 2023 database were DexCom, Inc. (NASDAQ:DXCM)’s investors. Israel Englander’s Millennium Management is the largest investor out of these, owning 1.9 million shares that are worth $244 million.
Baron Health Care Fund made the following comment about DexCom, Inc. (NASDAQ:DXCM) in its Q3 2023 investor letter:
“DexCom, Inc. (NASDAQ:DXCM) is a leading provider of continuous glucose monitoring technology (CGM) for people with diabetes. The stock declined after Novo Nordisk released SELECT trial results. The trial results have led to investor concerns that Wegovy and medications in the same class (Ozempic, Mounjaro, and other drugs in development) may be broadly reimbursed by payors and widely adopted. This has raised questions about the long-term impact of GLP-1 drugs on the size of DexCom’s addressable market and the terminal value of the stock as these new medications could slow the progression of diabetes for those who are pre-diabetic and reduce the need for insulin for those with Type 2 diabetes. We think GLP-1 drugs will be used in conjunction with CGM technology, which will remain a critical diabetes management tool. We continue to believe DexCom has an attractive long-term growth runway ahead.”
Intel Corporation (NASDAQ:INTC) is an American multinational corporation and technology company situated in Santa Clara, California. It ranks among the world's largest semiconductor chip manufacturers in terms of revenue and is a key contributor to the development of the x86 series of instruction sets commonly utilized in personal computers.
Moreover, Intel Corporation (NASDAQ:INTC)'s Industrial Internet of Things (IIoT) and Industry 4.0 portfolio comprises cutting-edge edge computing solutions, advanced private 5G technologies, purpose-built Time-Sensitive Networking capabilities, and integrated enhancements for edge-based artificial intelligence. These integrated features and technologies are designed to cater to the requirements of real-time and edge computing applications.
On October 27, Intel Corporation (NASDAQ:INTC) witnessed a 9% increase in its stock price following the company's third-quarter earnings report, which exceeded expectations. This performance can be attributed to the success of Intel's foundry business and the escalating interest in artificial intelligence, along with promising indications of a rebound in the PC market. Intel Foundry Services (IFS), responsible for manufacturing chips for corporate and government clients, recorded an impressive $311 million in revenue, marking a substantial 299% growth compared to the same period in the previous year.
As of the end of Q2 2023, 71 hedge funds tracked by Insider Monkey reported having stakes in Intel Corporation (NASDAQ:INTC), up from 68 in the previous quarter. The consolidated value of these stakes is over $2.55 billion. With over 11 million shares, Millennium Management was the company’s leading stakeholder in Q2.
ClearBridge Investments mentioned INTC in its Q3 2023 investor letter. Here is what the firm has to say:
“We also added to our position in Intel Corporation (NASDAQ:INTC) to take advantage of signs that it continues to make progress on its goal of regaining technology leadership. Intel appears to be executing its technology/product roadmap; the company is on track to ramp up PC and server products over the next 12 months on advanced manufacturing nodes that we believe will be more competitive with chief rival Advanced Micro Devices. We also see green shoots in the PC and server markets, with an increasing possibility of a cyclical recovery in both end markets in 2024.”
Broadcom Inc. (NASDAQ:AVGO) is a multinational American company that specializes in the design, development, and production of a diverse array of semiconductor and infrastructure software products. These product offerings from Broadcom Inc. (NASDAQ:AVGO) cater to a broad spectrum of markets, including data centers, networking, software, broadband, wireless, storage, and industrial sectors. For the last 12 years, the company has maintained a track record of steadily increasing its dividends. Presently, it offers a quarterly dividend of $4.60 per share. As of October 29, the stock's dividend yield stood at 2.19%.
Broadcom Inc. (NASDAQ:AVGO)'s impending acquisition of VMware for $69 billion is making significant progress, as it has secured most of the required international clearances and foreign investment approvals. The deal is anticipated to be finalized prior to the merger agreement's expiration date. Although there might be a potential delay due to China's regulatory approval, introducing some uncertainty, there have been no legal hindrances encountered within the United States concerning this transaction.
For their June quarter of 2023 shareholdings, 72 out of the 910 hedge funds tracked by Insider Monkey had held a stake in the company. Broadcom Inc. (NASDAQ:AVGO)’s largest shareholder is Ken Fisher’s Fisher Asset Management as it owns 1.9 million shares that are worth $1.6 billion.
In addition to QUALCOMM Incorporated (NASDAQ:QCOM), Intel Corporation (NASDAQ:INTC), Microsoft Corporation (NASDAQ:MSFT), and Amazon.com, Inc. (NASDAQ:AMZN), Broadcom Inc. (NASDAQ:AVGO) is one of the best IoT stocks that investors should take note of.
