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The Internet of Things (IoT) is rapidly transforming the world around us, connecting everyday devices and enabling them to collect, exchange, and analyze data. This revolutionary technology has the potential to optimize processes, enhance efficiency, and unlock new revenue streams across various industries.

Key Takeaways:

• Broadcom, Qualcomm, and Samsara are leading the IoT market with significant growth and innovative solutions.
• Investing in IoT stocks offers exposure to a rapidly expanding market with diverse applications across industries.
• Performance comparison of top IoT stocks shows strong returns and promising future growth.

What is the Internet of Things (IoT)

The Internet of Things (IoT) refers to the vast network of interconnected devices, sensors, and systems that can collect, exchange, and analyze data without human intervention. These devices, ranging from household appliances to industrial machinery, are equipped with sensors and communication capabilities, allowing them to transmit data over the internet or local networks.

The IoT ecosystem consists of various components, including hardware devices, communication protocols, cloud computing platforms, and data analytics tools. By leveraging this technology, businesses can streamline operations, enhance efficiency, and gain valuable insights through real-time data collection and analysis.

Performance Comparison of Top Internet of Things (IoT) Stocks

7 Best Internet of Things (IoT) Stocks to Buy

The companies we have listed are based on hedge fund interest, using data from Insider Monkey’s Q2 2024 report.

1. Broadcom (AVGO)

Number of Hedge Fund Holders (Q2 2024): 130

Broadcom Inc. is a global technology leader that designs, develops, and supplies a broad range of semiconductor and infrastructure software solutions. The company’s products are used in data center, networking, software, broadband, wireless, and storage and industrial markets.

Broadcom Inc. reported robust Q2 2024 results, with revenue soaring 43% year-over-year to $12.5 billion. AI-driven demand propelled sales, with AI products contributing a record $3.1 billion. The company’s adjusted EBITDA reached $7.4 billion, or 59% of revenue. In response to this performance, Broadcom raised its fiscal 2024 guidance to $51 billion in revenue and 61% adjusted EBITDA margin.

The semiconductor solutions segment, crucial for IoT applications, grew 6% to $7.2 billion. This growth suggests rising demand for IoT-related chips, sensors, and connectivity solutions. Meanwhile, infrastructure software revenue skyrocketed 175% to $5.3 billion, potentially expanding Broadcom’s IoT platform capabilities. The company’s free cash flow hit $4.4 billion, providing resources for IoT innovation.

According to insidermonkey, GQG Partners, led by Rajiv Jain, holds a $5.2 billion stake in Broadcom (AVGO), comprising 32.3 million shares of the semiconductor company.

Broadcom announced a 10-for-1 stock split and maintained its $5.25 quarterly dividend. The company’s $2.4 billion R&D investment in Q2 could accelerate IoT advancements. With a strong focus on AI and software integration, Broadcom is well-positioned to drive innovation in IoT technologies, enabling more sophisticated, interconnected smart devices and systems across various industries.

According to Wall Street Analyst on AVGO stock. Of the 46 analysts following the stock, 30 give it a Buy and 8 has it at Hold.

Why We Picked Broadcom:

• Broadcom is a technology leader offering a diverse range of semiconductor and software solutions, which are essential for the IoT ecosystem.
• The company has a strong market position and a history of innovation, ensuring its products remain in high demand.
• Broadcom’s commitment to R&D and acquisitions, such as the Symantec Enterprise Security acquisition, enhance its IoT security capabilities, making its offerings even more attractive to businesses.

2. Qualcomm (QCOM)

Number of Hedge Fund Holders (Q2 2024): 100

Qualcomm Inc. is a world leader in wireless technology innovation and a driving force in the development and expansion of 5G. The company creates advanced wireless technologies and products that power the Internet of Things, as well as enable immersive experiences and connected computing for billions of devices worldwide.

Qualcomm’s Q3 fiscal 2024 earnings report highlights mixed results in their Internet of Things (IoT) division. IoT revenues reached $1.4 billion, an 8% year-over-year decline from $1.5 billion in Q3 2023. However, combined with Automotive, IoT revenues totaled $2.2 billion, reaching the high end of Qualcomm’s guidance range.

Qualcomm plans to unveil a new product roadmap for industrial IoT in the coming months. This initiative will support multiple operating systems, enable running multi-billion parameter AI models, and provide a comprehensive development platform. The company’s Qualcomm AI Hub now supports over 100 pre-optimized AI models, offering up to 4x faster inferencing for IoT applications.

According to insidermonkey, Matrix Capital Management, led by David Goel and Paul Ferri, invested $10 million in Qualcomm (QCOM), now worth nearly $2 billion.

The company’s collaboration with Aramco aims to accelerate digital transformation in Saudi Arabia’s industrial sector. This partnership leverages Qualcomm’s broad technology portfolio, including their Qualcomm Cloud AI 100 Ultra Inference Accelerators, which were recently integrated into G42’s Core42 Compass 2.0 enterprise AI platform. These developments underscore Qualcomm’s commitment to advancing IoT technologies across various industries and regions.

According to Wall Street Analyst on QCOM stock. Of the 39 analysts following the stock, 17 give it a Buy, 13 has it at Hold and 1 calls it a sell.

Why We Picked Qualcomm:

• Qualcomm is a leader in wireless technology and 5G innovation, which are crucial for the future of IoT.
• The company’s extensive portfolio of IoT technologies and services provides a solid foundation for growth.
• Qualcomm’s Snapdragon processors and wireless edge services enhance the capabilities of IoT devices, making them more powerful and intelligent.

3. Samsara (IOT)

Number of Hedge Fund Holders (Q2 2024): 26

Samsara Inc. is a leader in industrial IoT solutions, combining hardware, software, and cloud-based analytics to bring real-time visibility, analytics, and AI to operations. Samsara’s solutions help businesses improve safety, increase efficiency, and enhance customer service.

Samsara reported strong financial results for Q1 FY2025. The company’s revenue grew 37% year-over-year to $280.7 million, while its ARR reached $1.176 billion, also up 37%. This growth reflects the increasing demand for IoT solutions in physical operations across industries such as transportation, construction, and manufacturing.

Samsara’s Connected Operations Cloud leverages IoT data from tens of thousands of customers across North America and Europe to provide actionable insights. The company’s customer base expanded significantly, with 1,964 customers now having Annual Recurring Revenue (ARR) over $100,000, up 43% from the previous year. This growth demonstrates the scalability of Samsara’s IoT platform.

According to insidermonkey, Gavin Baker of Atreides Management invested $49.7 million in Samsara, an IoT company, acquiring 1.47 million shares.

As IoT continues to transform industries, Samsara’s focus on delivering clear and fast ROI for customers is driving its growth. The company’s non-GAAP operating income reached $6.2 million, a significant improvement from a $19.0 million loss in the same quarter last year. This financial turnaround, coupled with a 77% non-GAAP gross margin, underscores the growing importance and profitability of IoT technologies in improving operational efficiency and safety across diverse sectors.

According to Wall Street Analyst on IOT stock. Of the 16 analysts following the stock, 10 give it a Buy and 6 has it at Hold.

Why We Picked Samsara:

• Samsara is a leader in industrial IoT solutions, combining hardware, software, and analytics to bring real-time visibility and intelligence to operations.
• The company’s diverse range of applications, including fleet management, asset tracking, and building security, showcases the versatility of its IoT solutions.
• Samsara’s subscription-based business model generates recurring revenue, providing stable cash flow and growth potential.

4. Impinj (PI)

Number of Hedge Fund Holders (Q2 2024): 29

Impinj Inc. is a leading provider of RAIN RFID solutions, delivering connectivity for everyday items such as apparel, medical supplies, and automobile parts. Impinj’s platform connects every item to the internet, delivering digital life to the physical world and offering endless IoT possibilities.

Impinj reported impressive Q2 2024 financial results, showcasing the growing demand for connected devices. Revenue hit a record $102.5 million, up 19% year-over-year, while adjusted EBITDA reached $26.8 million. The company’s non-GAAP net income soared to $25.3 million, or $0.83 per diluted share.

CEO Chris Diorio highlighted Impinj’s strong market position in connecting everyday objects to the internet. The company’s success is evident in its free cash flow, which topped $40 million for the quarter. This performance underscores the accelerating adoption of RFID technology across various industries, from retail to supply chain management.

According to insidermonkey, Ken Griffin’s Citadel Investment Group holds 45 million shares of Impinj (PI) and a 1.125% note due 5/1 valued at $69.8 million.

For Q3 2024, Impinj projects revenue between $91-94 million and non-GAAP net income of $13.5-15 million. These forecasts reflect the ongoing expansion of IoT applications, with Impinj’s RAIN RFID solutions playing a crucial role in bridging the physical and digital worlds. The company’s growth aligns with broader IoT market trends, as analysts predict the number of connected devices worldwide will reach 29 billion by 2030.

According to Wall Street Analyst on PI stock. Of the 10 analysts following the stock, 9 give it a Buy and 1 has it at Hold.

Why We Picked Impinj:

• Impinj is a leading provider of RAIN RFID solutions, connecting everyday items to the internet and unlocking IoT possibilities.
• The company’s technology enhances supply chain management, inventory visibility, and data insights for businesses.
• Impinj’s unique offering in the IoT space makes it a compelling pick, especially with its share price presenting a potential buying opportunity.

5. Alarm.com (ALRM)

Number of Hedge Fund Holders (Q2 2024): 31

Alarm.com is a technology company that provides cloud-based software platform solutions for smart residential and commercial properties. Their platform integrates with a range of Internet of Things and smart home devices to provide remote monitoring, management, and control solutions.

Alarm.com reported strong Q2 2024 results, with SaaS and license revenue growing 11% to $155.9 million. Total revenue increased 4.4% to $233.8 million, while GAAP net income surged 112.1% to $33.5 million. The company’s non-GAAP adjusted EBITDA rose 17.8% to $42.8 million.

The IoT platform provider’s cash and cash equivalents reached $1.1 billion, up from $697 million at 2023’s end. This increase was partly due to a $500 million convertible senior notes offering, strengthening Alarm.com’s financial position in the growing IoT market.

According to insidermonkey, Steelhead Partners’ Michael Johnston holds a $36.9 million stake in Alarm.com (ALRM), consisting of 40.3 million shares.

Alarm.com’s success reflects the IoT industry’s expansion, projected to reach $1.6 trillion by 2025. The company’s network spans thousands of service providers globally, serving millions of users with integrated solutions for security, automation, and energy management in both residential and commercial sectors.

According to Wall Street Analyst on ALRM stock. Of the 9 analysts following the stock, 5 give it a Buy and 3 has it at Hold.

Why We Picked Alarm.com:

• Alarm.com’s cloud-based platform manages and controls a wide range of IoT devices, making it a versatile and attractive investment opportunity.
• The company’s technology has proven adaptable beyond security, with applications in energy management, property management, and wellness monitoring.
• Alarm.com’s subscription-based model and recurring revenues make it an appealing choice for investors seeking stable and predictable cash flows.

6. Cisco Systems (CSCO)

Number of Hedge Fund Holders (Q2 2024): 62

Cisco Systems, Inc. is a worldwide leader in IT and networking solutions. The company offers a broad range of technologies, including networking, security, collaboration, and the Internet of Things (IoT), enabling businesses to digitize their operations and connect dispersed workers and locations.

Cisco reported Q4 revenue of $13.6 billion, with product order growth of 14% year-over-year. The security segment saw an 81% increase, while observability grew 41%. These gains underscore Cisco’s strong position in supporting IoT infrastructure, as connected devices proliferate across industries.

Total annualized recurring revenue reached $29.6 billion, up 22% from the previous year. This growth reflects the ongoing shift towards software-defined networking and cloud-based solutions, which are essential for managing the complexity of large-scale IoT deployments.

According to insidermonkey, Harris Associates, part of Natixis Global Asset Management, holds 10.45 million shares of Cisco Systems (CSCO), valued at $496.38 million.

Cisco’s guidance for fiscal 2025 projects revenue between $55.0 billion and $56.2 billion. This outlook suggests continued investment in technologies that enable secure, efficient IoT ecosystems. As the number of IoT devices is expected to surpass 29 billion by 2030, Cisco’s focus on AI-driven networking and cybersecurity positions it well for future growth.

According to Wall Street Analyst on CSCO stock. Of the 28 analysts following the stock, 8 give it a Buy and 20 has it at Hold.

Why We Picked Cisco Systems:

• Cisco Systems is a leader in networking and IT solutions, providing the essential infrastructure for IoT deployments.
• The company’s focus on IoT presents growth opportunities, as it expands into new markets like industrial IoT with strategic acquisitions.
• Cisco’s commitment to cost-cutting and streamlining its business enhances its competitiveness in the dynamic IoT space.

7. Dexcom (DXCM)

Number of Hedge Fund Holders (Q2 2024): 64

Dexcom, Inc. is a medical device company primarily known for its continuous glucose monitoring (CGM) systems for people with diabetes. Their products provide real-time glucose data and insights, helping users better manage their diabetes and improve clinical outcomes.

DexCom’s Q2 2024 results showed 15% revenue growth to $1.004 billion. IoT-enabled CGM devices drove U.S. revenue up 19% to $731.9 million and international revenue up 7% to $272.4 million. The company’s GAAP operating income reached $158.0 million, or 15.7% of revenue, a 100 basis point increase year-over-year.

New IoT innovations include Direct-to-Watch functionality and integration with Insulet’s Omnipod 5 and Tandem’s Mobi insulin pumps. DexCom secured coverage for Dexcom ONE in France for type 2 diabetes patients on basal insulin. Sensor and other revenue grew 22% to $947.0 million, representing 94% of total revenue.

According to insidermonkey, Holocene Advisors, led by Brandon Haley, holds a $201 million position in Dexcom (DXCM), consisting of 1.77 million shares.

DexCom updated its 2024 revenue guidance to $4.00-4.05 billion and announced a $750 million share repurchase program. With $3.12 billion in cash and investments, the company maintains financial flexibility. Non-GAAP gross profit margin was 63.5%, while research and development expenses increased to $136.0 million, reflecting ongoing investment in IoT healthcare solutions.

According to Wall Street Analyst on DXCM stock. Of the 27 analysts following the stock, 18 give it a Buy and 7 has it at Hold.

Why We Picked Dexcom:

• Dexcom showcases the life-changing impact of IoT in healthcare, with its continuous glucose monitoring (CGM) systems improving diabetes management.
• The company’s IoT-enabled CGM systems provide real-time data, predictive alerts, and data sharing, enhancing clinical outcomes.
• Dexcom’s strong growth prospects, driven by the increasing prevalence of diabetes and the transition to CGM, make it an attractive investment opportunity.

CHECK OUT OTHER STOCKS

Conclusion

The IoT market is poised for significant growth in 2024, with companies like Broadcom, Qualcomm, and Samsara leading the way. Investing in these top IoT stocks offers a promising opportunity to capitalize on the expanding IoT ecosystem. By understanding the key players and their applications, investors can make informed decisions and potentially reap substantial returns.

FAQs

1. What is the Internet of Things (IoT)?

The Internet of Things (IoT) refers to a network of physical devices connected to the internet, enabling them to collect and exchange data. These devices range from everyday household items to complex industrial machinery, all equipped with sensors and software to enhance functionality and efficiency.

2. Why invest in IoT stocks?

Investing in IoT stocks offers exposure to a rapidly growing market with diverse applications across various industries. As IoT technology continues to evolve, companies involved in this space are likely to see significant growth and profitability.

3. What are the key applications of IoT?

Key applications of IoT include smart homes, industrial automation, healthcare, transportation, and energy management. These applications leverage IoT technology to improve efficiency, reduce costs, and enhance user experiences.

4. How do IoT companies generate revenue?

IoT companies generate revenue through the sale of hardware (such as sensors and chips), software solutions, and subscription-based services. They also offer value-added services like data analytics and cloud connectivity, which provide additional revenue streams.

5. What are the risks associated with investing in IoT stocks?

Investing in IoT stocks carries risks such as market volatility, technological obsolescence, and regulatory challenges. It’s essential to conduct thorough research and consider diversification to mitigate these risks.