Not far into the future, nearly everything around you will be connected to the internet — receiving, collecting, storing and transmitting data. As you probably know, the nickname for all of this is the “Internet of Things,” or IoT. It’s one of the defining technological trends of our age.
The rate at which the world is becoming connected is growing faster than anyone could have imagined. Consider that there are already more than 20 billion connected devices around the globe. By 2020, there will be at least seven connected devices for every human on earth. That equates to over 50 billion internet-connected devices in the world.
According to networking giant Cisco Systems (NASDAQ:CSCO), 500 billion devices are expected to be connected to the internet by 2030. Cars, phones, computers, watches, medical devices, ATMs, airplanes, security systems, refrigerators, homes and the list goes on and on.
It’s that mass connectivity that makes up the world of IoT stocks.
There are countless companies that stand to benefit from this huge and growing trend, but two in particular come to mind as the current leaders among Internet of Things stocks. Let me tell you a bit about each.
Internet of Things Stocks: Cisco Systems (CSCO)
Cisco is already a leader in the IoT industry, and considering it provides solutions for connectivity, security and automation it is expected to benefit from the boom in connected devices.
Looking at the five-year chart above, you can see that CSCO has been coming on strong recently. In fact, earlier this week it hit its best level since 2000 on the back of robust expected growth in its Internet of Things division. This once-leader of the 1990’s tech boom has found a way to change and adapt to the new world, and as a result I consider it a solid play on the next big thing in tech.
Internet of Things Stocks: Alphabet (GOOGL)
This is a company we all know and love — what would we do without the option to “Google” the answers to our never-ending streams of questions? Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) is another large-cap tech company that has found ways to adapt to the future of connectivity.
This stock has also steadily climbed over the years, and while it is currently down from its peak at the end of July, I have no concerns about its potential over the long term. Internet of Things stocks have a good runway.
Alphabet is a technology conglomerate that benefits from all types of related innovation, and the Internet of Things is similar in that it also touches nearly every aspect of innovation. From next-generation home appliances to autonomous vehicles to wearable devices, GOOGL’s potential is nearly endless.
The global market for IoT stocks to tap into is expected to grow from $157 billion in 2016 to an estimated $457 billion in two years. Investors who jump on the trend early can get a huge piece of the pie.
Matthew McCall is the founder and president of Penn Financial Group, an investment advisory firm, as well as the editor of FUTR Stocks and the ETF Bulletin. Matt just launched two new investment advisories focused around the “next” generation investing theme. His trademark three-prong investing approach targets the mega-trends old Wall Street is missing out on. Click here for more information on the “NexGen” Experience.
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