Just for the record, “trillion” means twelve zeroes … with a number in front of all of them. In this case, experts are putting a “1” in front of those twelve zeroes to describe how big the market for Internet of Things stocks should be by 2025.
It’s an awful lot of opportunity for investors who can figure out which names are best positioned to win more than their fair share of the fast-growing market.
Doing so no easy matter, to be fair. There are plenty of moving parts to the business, ranging from the telecommunications services that transmit digital data to the underlying hardware and the data-processing platforms that do something constructive with the mountains of information being collected.
Thing is, there’s potential profit growth in each facet of the IoT.
To that end, here’s a rundown of the market’s top ten Internet of Things stocks to mull. In some cases they’re predictable, though in other cases they may be surprising additions to such a list. In all cases, however, there’s an opportunity to capitalize on the still-nascent business. In no certain order…
Internet of Things Stocks: International Business Machines (IBM)
That’s not a mistake. Ol’ Big Blue is one of several Internet of Things stocks to put on your radar, even if it still offers plenty of other kinds of technologies and services.
Remember Watson? The artificial intelligence platform created by International Business Machines (NYSE:IBM) a few years ago is doing far more than playing TV’s Jeopardy. It’s helping fight cancer, completing tax returns and picking stocks, just to name a few.
The same artificial intelligence tool is also able to do the serious number crunching that does something useful with all the data gathered and created by IoT devices. The company’s Watson-powered IoT platform was even named a category leader by tech-industry research outfit IDC.
It’s still only a small part of International Business Machines’ revenue mix, but there’s no denying it’s part of the landscape.
Internet of Things Stocks: Sierra Wireless (SWIR)
Whereas IBM is a very familiar name to most investors, Sierra Wireless (NASDAQ:SWIR) isn’t. Nevertheless, chances are good you’ve been a user of its technology without even realizing it.
Sierra Wireless, as the name suggests, makes wireless connectivity solutions. In fact, it’s the number one cellular module vendor in the world, meaning there’s a good chance your cell phone or smartphone has Sierra tech inside it, helping you connect your device to the wireless web.
It matters. All those devices that gather and transmit data remotely, like a smart electric meter or smart-home tools? They each require a means of connecting to a central hub. Sierra Wireless makes that happen by making meter-specific and smart-home-specific connectivity technologies.
And that’s just a small piece of the company’s presence in the Internet of Things market.
Internet of Things Stocks: Marvell Technology Group (MRVL)
Marvell Technology Group (NASDAQ:MRVL) is another one of those names that may be less-than-well-known, but is an important IoT prospect all the same.
For those that do know it, Marvell Technology Group is largely considered a specialty semiconductor name. It’s a categorization, however, that doesn’t do the company justice. Its specialties include data storage, network infrastructure and wireless connectivity solutions, all of which are necessary for the Internet of Things to work.
Indeed, with last year’s announcement that Marvell would be acquiring Cavium, CEO Matt Murphy went as far as to say MRVL had become a “pure play” on industrial cloud and industrial IoT. He explained investors “love the fact that you’re getting a pure play infrastructure, cloud-levered, [internet-of-things]-levered company that really takes care of all the interconnections within the cloud and to the edge.”
Internet of Things Stocks: AT&T (T)
Marvell Technology may be an off-the-radar name, but AT&T (NYSE:T) certainly isn’t a company that needs an introduction.
Though most investors view AT&T as a consumer-oriented stock, that’s because they only see the company’s consumer-oriented advertising. The telecom giant operates a massive business-oriented arm, and has been proactive in developing products that make it a go-to connectivity provider for developed of Internet of Things device manufacturers.
Case in point: Its M2X platform is a turn-key solution for industrial-level customers that want to get more out of their operations.
The plan is working. Infrastructure and device-management companies are tapping AT&T’s custom-built technologies to serve as a solution. General Electric (NYSE:GE), for instance, relies on AT&T to manage the public lighting network for the city of Atlanta.
Internet of Things Stocks: STMicroelectronics (STM)
Geneva-based STMicroelectronics (NYSE:STM) is another one of those Internet of Things stocks that’s easy to overlook, but shouldn’t be.
Much like Marvell, STMicroelectronics is often chalked up as just another semiconductor stock. There’s more to the company than vague technologies, however. STMicroelectronics is building several IoT solutions from the ground up, and is quietly deepening its presence in the market.
That said, its biggest Internet of Things accolade arguably materialized in March when Chinese e-commerce powerhouse Alibaba (NYSE:BABA) successfully used STMicroelectronics-made six-axis sensors as a means of turning physical information into digital information. That validation gives STMicroelectronics an inside track to Alibaba’s Internet of Things endeavors, even without knowing exactly what they may be.
Internet of Things Stocks: Honeywell (HON)
If you think Honeywell (NYSE:HON) is just thermostats, auto parts, industrial materials and fluid meters, think again. This “old school” player is far more high tech than it gets credit for.
Yes, this means (among other things) the company is a key player within the Internet of Things market, even if it’s a less-than-elegant presence.
Playing to its strengths, Honeywell is focusing on the industrial Internet of Things. This includes gas flow measurement, tank level measurement and the means of receiving that information remotely. It’s not just sensors and transmitters though. The company also offers a centralized means of collecting that data and doing something constructive with it.
Whatever Honeywell is doing, it was enough to land it a spot on CRN’s list of the world’s 15 Coolest Industrial Companies last year.
Internet of Things Stocks: Qualcomm (QCOM)
Qualcomm (NASDAQ:QCOM) isn’t a name any investor is too terribly surprised to see on a review of the market’s top Internet of Things stocks. Even so, odds are good that the average investor still underestimates just how big of a role the company’s going to play in the mainstreaming of IoT. It’s developing some serious custom-built solutions now, versus a previous approach of repurposing tech designed for other things.
Its QCS605 and QCS605 chipsets, for instance, are systems-on-chips (SoCs) built specifically for use in things like robotic vacuum cleaners and smart displays … the next evolution in at-home digital assistants. More recently it was announced that its wireless “Edge” software and module that use 2G connectivity are actually upgrade-ready for narrownband IoT and LTE-M.
A million little things like that — as opposed to a handful of huge developments — subtly keep Qualcomm on the leading edge of the IoT front.
Internet of Things Stocks: Cypress Semiconductor (CY)
Cypress Semiconductor (NASDAQ:CY) may be best known for touch sensors, flash memory and the underlying technologies needed to make them function. The fact of the matter is, however, the company is waist deep in Internet of Things waters.
Its wireless PSoC (programmable system-on-chip) 6 microcontrollers illustrate this idea quite well. The platform can connect practically anything to anything else, digital or analog, making Cypress Semiconductor an easy solution for an IoT developer market that doesn’t always know how to finalize a particularly tricky product design.
Cypress further opens the door to developers by offering three different IoT software platforms to choose from, if an organization doesn’t have its own IoT programming solution.
Internet of Things Stocks: Nvidia (NVDA)
Nvidia (NASDAQ:NVDA) is already well known as a CPU and GPU maker, the latter of which (as it turns out) make for great cryptocurrency mining and artificial intelligence platforms. It’s generally not a name lumped into a list of Internet of Things stocks, however.
But think about it for a second. A huge chunk of the artificial intelligence movement has been for the purpose of making the Internet of Things industry useful, and even indispensable. Nvidia is riding the IoT wave, even if indirectly.
That said, it’s not as if Nvidia isn’t unaware of the opportunity ahead. It has tweaked several technologies to capitalize on the Internet of Things. Case in point: In March, it and ARM teamed up, with ARM choosing Nvidia’s Deep Learning Accelerator architecture as part of its Project Trillium machine learning suite. The move makes Nvidia’s chips a no-brainer choice for a wider swath of AI product developers.
Internet of Things Stocks: Cree (CREE)
Last but not least, Cree (NASDAQ:CREE) should be on your Internet of Things stocks radar.
Yes, this is the same Cree that makes LED lighting solutions, particularly for large, institutional buildings. And, it doesn’t appear to be doing it all that well. Revenue has been trending lower for a few years now, as competition has entered the race. The company’s foray into smart lighting, however, may be just the tweak it needs not only to rekindle sales growth, but for Cree to stake out its claim on the Internet of Things landscape.
It’s called SmartCast, by the way. Though the lighting-management platform has been around for a couple of years now, it’s the recent expansion that could start to turn the heads of building planners. The platform will now be able to work with wirelessly connected control networks. A new partnership with Synapse Wireless will also allow for intelligent lighting control of outdoor areas.
To that end, analysts expect next year to be a real turnaround year for Cree, largely on the heels of the new-and-improved SmartCast Intelligence Platform. The pros are looking for a 14% increase in revenue, driving a big rebound in profits.
As of this writing, James Brumley held a long position in AT&T. You can follow him on Twitter, at @jbrumley.
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