We recently compiled a list of the top 10 Internet of Things (IoT) stocks to buy. In this article, we’ll take a look at how International Business Machines Corporation (NYSE:IBM) stands compared to other IoT stocks.
The Internet of Things (IoT) is a vast network that connects physical objects to the Internet. Industries are adopting IoT technology for applications such as smart manufacturing and supply chain management. Business IoT spending is expected to slow in the second half of this year due to economic concerns that will impact overall business spending. However, enterprise spending on IoT will rebound in 2025. The global market for IoT is expected to grow at an annual rate of 24.3% from 2024 to 2032. By 2032, its value is expected to reach $4,623.4 billion.
The rise of smart homes, buildings, manufacturing, and advances in smart infrastructure are driving significant growth in the IoT market. Additionally, smart city initiatives are becoming increasingly popular due to population growth and urban expansion. Consumers are adopting smart city solutions such as smart utility meters, transportation, waste management, power grid, and air quality controllers.
Other sectors, particularly healthcare, are also seeing rapid adoption of IoT. The global IoT in healthcare market is expected to expand significantly and reach $952.3 billion by 2032, growing at a compound annual growth rate (CAGR) of 18%. IoT is a major force behind the digital transformation of healthcare, revolutionizing the way healthcare data is collected, analyzed, and used. This enables improved patient care, increased operational efficiency, and innovative treatments.
The introduction of IoT in warehouse management is also progressing. The global IoT warehouse management market is projected to grow from $14.8 billion in 2023 to $57.2 billion by 2033, reflecting a CAGR of 14.5% over the next decade. This growth is being driven by the need to improve inventory management, increase automation, and increase operational efficiency in logistics and supply chain operations.
Related article: 10 Internet content stocks to buy
In terms of market segmentation by technology, WiFi, Bluetooth, and cellular IoT account for 80% of the global IoT market. Wi-Fi accounts for 31% of all IoT connections. Meanwhile, Bluetooth is used by 25% of connected IoT devices, and cellular IoT, including 2G, 3G, 4G, 5G, LTE-M, and NB-IoT, accounts for almost 21% of global IoT connections .
A key trend in the IoT market in 2024 is the integration of AI technologies, such as generative AI and edge AI, into IoT devices. Edge AI in particular is transforming the IoT landscape. By allowing IoT devices to process and store data locally, edge AI reduces latency and enables real-time responses. Incorporating AI into IoT devices within your industry offers many benefits, including improved operational efficiency, safety, and decision-making. It plays a key role in predictive maintenance and supply chain management.
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The future of IoT looks promising. As technology continues to evolve, companies and investors can expect significant returns. With this context in mind, let’s take a look at the best IoT stocks to buy now.
our methodology
To create our list of the 10 best IoT stocks to buy, we focused on companies that provide IoT solutions or products, such as companies involved in manufacturing IoT devices or hardware. These companies are shortlisted based on hedge fund sentiment from a database of over 900 hedge funds. We ranked the best IoT stocks as of Q2 2024 by the number of hedge funds that own the stock.
Why are we interested in stocks that hedge funds invest in? The reason is simple. Our research shows that by mimicking the top stock picks of the best hedge funds, you can outperform the market. Our quarterly newsletter strategy selects 14 small- and large-cap stocks each quarter and has returned 275% since May 2014, outperforming the benchmark by 150 percentage points (Learn more ).
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International Business Machines Corporation (NYSE:IBM)
Number of hedge fund holders: 54 people
International Business Machines Corporation (NYSE:IBM) is a leading American multinational technology company known for a wide range of products, including computers, storage systems, networking devices, and servers. International Business Machines Corporation (NYSE:IBM), headquartered in Armonk, New York, also provides a variety of consulting, technology, and business services, including cloud computing, IoT, data analytics, and AI.
International Business Machines Corporation (NYSE:IBM) posted decent financial performance last quarter due to strategic execution, product mix, and productivity initiatives. Sales rose 2%, and the company raised its full-year free cash flow forecast to more than $12 billion.
International Business Machines Corporation (NYSE:IBM) is also pleased with the strong progress of its AI products. Every quarter, we acquire more customers, expand partnerships, and launch new innovations. To date, business related to watsonx and generative AI has exceeded $1 billion, reflecting consistent quarter-on-quarter growth.
Adding to this, International Business Machines Corporation (NYSE:IBM) stock has been doing very well, soaring 25% in the past three months and returning more than 45% year-to-date. This stock offers an attractive dividend yield of approximately 3.1%.
Here’s what Diamond Hill Capital said about International Business Machines Corporation (NYSE:IBM) in its Q2 2024 investor letter:
“Among the stocks with the lowest contributions in the first quarter included short positions in Dick’s Sporting Goods, International Business Machines Corporation (NYSE:IBM), and Palomar Holdings. IBM’s Investor sentiment has improved amid optimism about the company’s still-infant AI product suite, although the quality and durability of its ability to generate free cash flow remains questionable.
Overall, IBM ranks 10th on our list of IoT stocks to buy. While we acknowledge IBM’s potential as an investment, we believe AI stocks are more likely to deliver higher returns and do so in a shorter time frame. If you’re looking for AI stocks with more promise than IBM, but trading at less than 5x earnings, check out our report on the cheapest AI stocks.
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Disclosure: None. This article was originally published on Insider Monkey.