Finder is committed to editorial independence. While we receive compensation when you click links to partners, they do not influence our content.
Investing in Internet of Things stocks
Growth projections are impressive, but the technology isn’t a necessity for most consumers.
The Internet of Things is a concept that’s expanding rapidly, evolving into a whole range of devices like washers and thermometers that “talk” to one another over the Internet. But investors should be wary of emerging data regulations before they invest.
What is the Internet of Things?
The Internet of Things (IoT) refers to a network of physical devices capable of connecting to the Internet. Many of us use this network every day, from streaming music through wireless headphones to adjusting the thermostat of our homes with a mobile device. Wearable technology, automated vehicles and smart devices all belong to the Internet of Things.
Popular Internet of Things devices include:
- Amazon Echo
- August Smart Lock
- AWS Snowcone
- Google Home
- Nest Smoke Alarm
- Ring Doorbell
- WeMo Insight Smart Plug
Internet of Things stocks are from companies that design or produce Internet-connected hardware and software. You can invest in the IoT by purchasing individual stocks or exchange-traded funds.
Why invest in Internet of Things stocks?
The Internet of Things is considered a growth industry with numerous consumer, commercial and industrial applications. Automation is the name of the game for many subsectors of the tech industry as consumer demand for autonomous tech rises.
The global market for Internet-connected end-user solutions hit $100 billion in market revenue in 2017, according to Statista. And it’s forecast that by 2025, the industry will be worth $1.6 trillion. B2B market research suggests a compound annual growth rate of 26.9% for the IoT sector from 2017 to 2022.
Smart technology is growing rapidly, and IoT stocks give investors the chance to back a fast-paced sector with promising growth projections.
Risks of investing in the Internet of Things
Economic downturn can impact the viability of businesses that produce or sell consumer goods. After all, if consumer spending declines, so do profits. A large chunk of the IoT industry comprises electronics that are new enough for consumers to consider luxurious novelties — not necessities. This sector’s growth could be affected by even a mild recession.
Another major concern for investors is data privacy and security. This technology is evolving, and emerging data-protection legislation may damper the industry’s progress. As we continue to explore the role of this technology in our everyday lives, tightening data regulations and more robust privacy protections may force tech companies to rethink how Internet-connected devices access consumer data.
Tech companies are far from immune to government jurisdiction. Emerging regulations could force companies back to the drawing board to amend their software, delaying product launches and affecting existing product lines.
Internet of Things stocks
To purchase Internet of Things stocks, prepare to invest in semiconductors, sensors, processors, chips, Bluetooth technology and smart devices.
What ETFs track the Internet of Things category?
For those seeking a less targeted and more diverse approach to investing in the Internet of Things, ETFs may be worth considering. There are a number of ETFs that track some of the major players on the IoT scene. These ETFs include:
- Invesco NASDAQ 100 Index ETF (TSX: QQC-F)
- iShares S&P/TSX Capped Information Technology Index ETF (TSX: XIT)
- First Trust NASDAQ Technology Dividend Index Fund (NasdaqGM: TDIV)
- SPDR NYSE Technology ETF (NYSEArca: XNTK)
There is only one ETF that specifically tracks IoT stocks: the Global X Internet of Things Thematic ETF (NasdaqGS: SNSR). This fund has more than $231 million in total assets and tracks many big names in the IoT sector, including Garmin, Qualcomm and Vivint Smart Home.
Compare trading platforms
To invest in IoT stocks, you’ll need a brokerage account. Compare features and fees of top accounts to find the best fit for your goals and budget.
Internet-connected technology is growing at an impressive rate, with global market projections on track to crack USD $1 trillion by 2024. But the industry relies on consumer spending, and the technology isn’t yet a necessity for consumers — yet.
Explore your brokerage account options with multiple providers to find an account best suited to your investing needs.
Frequently asked questions
More on investing
Learn how to strategically find and invest in booming companies.Read more…
The stop-loss order can help you avoid big losses on your currency holdings.Read more…
Looking to buy into big data companies? Check out this list of stocks.Read more…
Looking to buy into the bus transportation industry? Check out this list of stocks.Read more…
Looking to buy into the asset management industry? Check out this list of stocks.Read more…
Looking to buy into the assisted living industry? Check out this list of stocks.Read more…
More guides on Finder
How to invest $1 million
Here are the top 5 ways you should invest $1 million.
Investing strategy: How growth stocks can make you money
Learn how to strategically find and invest in booming companies.
Investing in healthcare AI stocks
Looking to buy into the healthcare AI industry? Check out these stocks and ETFs, and learn more about how to invest.
Investing in materials stocks
Explore the benefits and risks of investing in raw materials.
How to invest in the trendiest tech of CES 2021
From air taxis to smart glasses, here’s how to back some of the hottest CES tech.
Find out why technology ETFs are a worthwhile investment, what the key risks are and which ETFs are popular with investors.
Best Canadian tech stocks on the TSX
Check out the best TSX tech stocks to buy in Canada based on company performance.
Can I buy Dingdong Maicai (DDL) stock in Canada?
If you live in Canada, you can’t buy Dingdong Maicai American Depositary Shares (ADSs). But you can invest in similar companies.
What is passive investing?
Passive investing involves tailoring your own stock portfolio to match a stock index. Could this cheap and straightforward strategy work for you?
Can I buy Full Truck Alliance (YMM) stock in Canada?
If you live in Canada, you can’t buy Full Truck Alliance American Depositary Shares (ADSs). But there are other options.
Ask an Expert
You must be logged in to post a comment.