There’s a revolution happening right before our eyes, a revolution of connected devices that will soon become so prevalent in our everyday lives that you will have to live in the woods in order to avoid it. Once called “ubiquitous computing”, today it is known as the internet of things. CEOs from all over the world are betting Billions of dollars that this tsunami of technological wonders will change everything from the workforce, to education, and even transportation.
Already on the market are several iterations of smart home products like smart thermostats, smart locks, smart lighting, and even smart outlets and plugs. But the internet of things will soon spill over into the business and public sector, becoming so common that it will be indistinguishable from magic.
According to leading global research institute for business and economics, McKinsey & Company claims Internet of Things could add up to 11 trillion dollars in value to the global economy.
Ginny Rometty, CEO of IBM, predicts that in the future “every decision that mankind makes is going to be informed by a cognitive system like Watson”.
Masayoshi Son, CEO of SoftBank, claims we will soon have “over 1 Trillion connected devices”, leading to what he calls a “super-intelligence” network of smart devices powered by artificial intelligence. He put his money where his mouth with the acquisition of ARM for $31 billion dollars.
Networking behemoth Cisco Systems, one of the biggest authorities in the future of IoT, predicts the number connected devices will double from 25 billion to 50 billion by 2020.
There’s no doubt that this field is going to produce countless innovations in the near and distant future, but which companies are best positioned to take advantage of this technological transformation?
Below are 12 companies that are well positioned in this space, and that will see significant upside in the coming years in their internet of things division. It’s important to note that some of these companies already have well established products and services that provide the bulk of their revenue, as well as having a very large market cap to begin with, so a doubling or tripling of their stock price in the short or medium term is unlikely.
Also worth noting is the larger than average P/E Ratio for a some of these companies, adding further evidence that the market is expecting significant revenue growth for these companies in the coming years.
12) Sierra Wireless
Ticker Symbol: SWIR
Market Cap: 818 M
P/E Ratio: 53.19
Industries: Wireless Technologies
The stock with the smallest market cap on this list may also be the one with the biggest growth potential. During its existence, Sierra Wireless has shipped over 130 million devices that enable the internet of things connectivity. Offering end to end solutions for IoT applications, Sierra is shaping the future by connecting proprietary software and hardware to the cloud. Sierra is the world leader in making the smallest cellular modules that enable Bluetooth, GNSS, and Wi-Fi technologies. If you want to connect a device wirelessly to the internet, chances are you will seek out Sierra Wireless for one or more solutions.
Ticker Symbol: MSFT
Market Cap: 501 B
P/E Ratio: 30.64
Industries: Software, Hardware, Cloud, Gaming
Microsoft is a staple in the technology sector. With such huge brand recognition and foothold in the software space, there is no way Microsoft does not benefit from the IoT revolution. Their prime value in this space may be in creating operating systems and artificial intelligence that powers robots. Cortana (Microsoft’s version of Alexa / Google Home) is slated to get her own hardware, and Microsoft will soon get into the voice-control space which may end up being the standard for user interfaces as Google and Amazon have not yet perfected it.
Ticker Symbol: SWKS
Market Cap: 18 B
P/E Ratio: 20.56
With over 40% of its revenue coming from Apple, Skyworks boasts an impressive foothold in the technology sector, and riding Apple’s coattail it has gathered more clients in China’s smartphone industry. A manufacturer of many components that make up a smartphone, Skyworks is poised to not only continue its revenue growth for many years to come, but also expand into other gadgets and mobile technologies that are connected.
Ticker Symbol: AAPL
Market Cap: 740 B
P/E Ratio: 16.89
Industries: Software, Hardware, Cloud, AI
The vision of Steve Jobs is still alive and well. Apple is probably the most recognized brand in the world, certainly in the tech industry. It’s virtually impossible to imagine a connected world without Apple playing a major part, and with innovation being central in their DNA, it will be exciting to see what kind of new technologies they develop in the coming years, as well as which acquisitions they may make.
Their latest gadget, the AirPods, were so popular they sold out right away, and the customer loyalty Apple holds is unrivaled by any other smartphone maker. Apple boasts the title of being the biggest company in America with a staggering 740B market cap, and there’s an unspoken race to be the first company to ever reach the 1 Trillion market cap, which could be easily done by using some of their free cash to make a major purchase.
Ticker Symbol: CSCO
Market Cap: 162 B
P/E Ratio: 16.63
Industries: Software, Cloud, Cybersecurity
A giant in networking infrastructure, Cisco Systems powers the connectivity of all things and will continue to do so for many years to come. At one point the biggest company in the NASDAQ, Cisco has continued to drive the interconnectedness of society. With so many Wi-Fi gadgets in the future, there will be a huge vulnerability for these items to be hacked, and Cisco will be at the forefront of providing the security and networking capacity to tie them all together.
Ticker Symbol: IRBT
Market Cap: 1.79 B
P/E Ratio: 43.71
Industries: Hardware, AI
Being one of the smallest companies on this list, iRobot has some of the best potential to be able to give investors over 100% return in the next few years. iRobot has the ‘first mover’ advantage in the connected home appliance industry, with their extremely popular Roomba model seeing only around 10% household adoption, they are just now starting to tap the market and gladly admitted in their last conference call that they are on the cusp of explosive growth.
Also slated to be soon released is a robot that mows the lawn, which will be another big revenue driver for them if not the biggest. Think of how much time you spend cutting the grass in your yard, even at a hefty price tag of close to $1,000 this could be an option for many families. At a market cap of fewer than 2 billion, iRobot may also be a very attractive acquisition target for one of the larger companies on this list, like an Alphabet, Samsung, or even Apple.
Ticker Symbol: VZ
Market Cap: 198 B
P/E Ratio: 15.1
Industries: Wireless Telecommunication
The internet of things will be connected wirelessly to the internet, so what better vessel to invest in than the company that provides the best wireless network in the country? Widely known for having the most reliable wireless service, Verizon is in a great position to host the future of connected things, not just smartphones and tablets, but also smartwatches, laptops, and literally anything that has a Wi-Fi connection that will need a backbone to operate in. The much anticipated 5G network standard that promises to provide speeds many times faster than today’s broadband will be coming online in a few years and you can be sure that Verizon will be spearheading this movement. * Notable mention to Comcast for being similarly positioned in this industry *
Ticker Symbol: INTC
Market Cap: 173 B
P/E Ratio: 16
Industries: Software, Hardware, AI
Making a major move recently in the artificial intelligence space, IBM acquired autonomous driving company mobile eye for a cool 15.3 billion dollars. This gave investors a look into the direction Intel is taking. There is no doubt that autonomous driving will be coming soon, it’s not a matter of if, but rather when, and chances are the first mover will have a massive advantage in grasping the industry by the neck.
Ticker Symbol: SSNLF
Market Cap: 251 B
P/E Ratio: 11.05
Industries: Software, Hardware
The number one smartphone maker in the world, Samsung might be the best positioned hardware IoT company in the world. Their SmartThings hub and other Wi-Fi gadgets such as the SmartThings plug, smoke detector, smart camera, and many more, Samsung is making major moves to make sure they become involved in every home that desires to be connected. Using the most popular operating system in the world (Android), Samsung also has a great relationship with the other company that will be driving the IoT Universe, Alphabet.
With a combination of brand recognition, a very healthy balance sheet, an obvious direction toward improving the internet of things, Samsung is an obvious play on the connected revolution, and even though they had a major incident in 2016 with their Note 7 models, their stock barely noticed and the company continues to drives sales with their new Galaxy 8 models and beyond.
Ticker Symbol: NVDA
Market Cap: 56 B
P/E Ratio: 37.45
Industries: Semiconductors, Microchips, Gaming, AI
Often cited as being the best stock on the NASDAQ in the year 2016, climbing over 400% after being rather stagnant for many years, Nvidia is finally cashing in on what was once thought of as just a graphic processing company. They are the crème de la crème when it comes to microchips and every company on the NASDAQ wants a piece.
Gamers have known for a long time that Nvidia brings the quality, their GPUs are standard issue for gamers wanting to have the best possible graphics, but their GPUs and other technologies are no longer being used for just gaming, Nvidia is about to hit every industry like an avalanche. Artificial Intelligence, Autonomous Driving, Gaming, Data Centers, Deep Learning, Augmented Reality and many other facets of technological innovation will be reaching out to this company in the coming years, a 400% rise is not illogical or the market getting ahead of itself, it’s just the beginning. Investors should only hope Nvidia can scale up fast enough to meet the demand the IoT industry will bring in the coming decades.
Ticker Symbol: GOOGL
Market Cap: 574 B
P/E Ratio: 30.19
Industries: Software, Hardware, Advertising, Cloud, AI
Long known for their search bar on google.com, Alphabet (Google’s parent company) was aptly renamed in order to assure investors they are not just a search and advertising company anymore, but rather their dominance in search will be the cash cow that finances all the other industries they will be getting into; the internet of things being one of the main ones. Recently purchasing Nest Labs and their famous Nest thermostat, Google is making obvious moves into the space, as well as having what is often cited as the best smart speaker, the Google Home device.
Google has one of the best balance sheets on wall street, with close to 100 of billion of free cash and very little debt, they are well positioned to acquire just about any company they want, and may end up becoming the first ever Trillion dollar company, Amazon being the only other competitor to that title. Google is also the second biggest cloud company in the world behind Amazon, and will only continue to grow with that sector.
Alphabet also boasts a large portfolio of companies that could in their own right be considered multi-billion dollar companies: YouTube being the biggest, followed by Google Maps, Google Cloud, Gmail, Waymo, Android, DoubleClick, and many more. Google is the soul of the internet and will be a major driving force in the internet of things, and trading at only 18x their IPO price, they are not as expensive as the number 1 company on this list, Amazon.
Ticker Symbol: AMZN
Market Cap: 422 B
P/E Ratio: 180.18
Industries: Hardware, Retail, Cloud, Gaming, Home Services, Aerospace, Logistics, AI
The rise of Amazon over the past 20 years has been nothing short of astounding. The vision of Jeff Bezos is now coming to fruition and he has his hands in more industries than just about any other company in the world. The darling of Wall Street, the explosive rise of Amazon stock has been due to the company's continued growth in the Ecommerce space, which is almost single handedly responsible for destroying the brick and mortar retail sector, taking a whopping 39% share of holiday sales and continuing to rise.
Having the first mover advantage in cloud services, AWS has the biggest cloud market share. Jeff Bezos has been quoted as saying AWS alone could be worth “trillions”. Amazon’s Echo Dot was one of the most popular holiday gifts which not only shows Amazon’s desire to get into the voice-control and IoT space, but also shows the public’s interest in the internet of things, having a connected home, and making their lives more convenient through technology. A combination Cloud, logistics, retail, and Mr. Bezos' intrigue in connected technologies will catapult Amazon into what may be the main growth driver for the IoT universe; especially since there is a great likelihood his website will be selling most of these devices direct to consumer.
Honorable mentions: Comcast, Sony, Huawei, AT&T, Bosch, Honeywell, GE