The Internet of Things (IoT) refers to the network of physical objects embedded with sensors, software, and other technologies to connect and exchange data with other devices and systems over the internet. As IoT technology continues to develop rapidly, investing in IoT stocks provides huge opportunities for growth. This article will provide strategies on how to invest in the emerging IoT industry through stocks.
The IoT market is expected to grow exponentially in the coming years as more devices get connected, generating massive data that can lead to development of new products and services. Many experts project that there will be over 30 billion IoT devices globally by 2025. This rapid growth makes IoT stocks very attractive for investors. Major companies like Microsoft, Amazon, Google, IBM, and Intel are making big bets in IoT and there are also many specialized IoT companies to consider.
Focus on IoT infrastructure and connectivity providers
The foundation of IoT networks relies on connectivity and infrastructure like sensors, gateways, cloud platforms etc. So companies manufacturing IoT hardware components and providing connectivity platforms present a major investment opportunity. For example, semiconductor companies making sensor chips like Texas Instruments, Analog Devices, ST Microelectronics are key to enable IoT devices. Networking giants like Cisco providing routers and switches to enable IoT connectivity can also be good investments.
Cloud platforms and data analytics leaders
As IoT generates massive amounts of data, companies offering data storage, analytics and insights have huge growth potential. Cloud leaders like Amazon Web Services, Microsoft Azure, Google Cloud have rolled out specialized IoT services to help companies store, process and analyze IoT data streams. Startups focusing on IoT data analytics like Uptake, C3IoT, Sense360, Splunk also have long growth runways.
IoT application providers across industries
Specialized IoT companies providing solutions for smart homes, industrial automation, connected vehicles, logistics monitoring etc. can also offer rewarding investment opportunities as adoption of IoT increases substantially. For instance, smart electric meter provider Itron, building automation leader Johnson Controls, fleet telematics giant MiX Telematics, precision farming solutions provider Telit are stocks worth tracking.
Diversify across sub-sectors and market capitalizations
Since IoT has applications across diverse sectors, construct a portfolio across industries and segments like hardware, connectivity, cloud platforms, security, data analytics, sensors etc. Investing in a mix of established giants along with emerging startups across different market caps can balance out risks.
In summary, investors can gain exposure to the high-growth IoT industry through stocks of companies providing connectivity equipment, cloud platforms, data analytics solutions and industry-specific IoT applications. Creating a diversified portfolio with both leaders and emerging innovators across market caps and sub-sectors provides an optimal risk-return profile.