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For most of 2016, semiconductors were one of the hottest industries to invest in. While that strength has cooled off a bit, the industry is still seen as a high-growth opportunity thanks to the increasing demand for small, high-powered chips that enable “Internet of Things” (IoT) devices.
For those that don’t know, the Internet of Things refers to the growing world of interconnected household and industrial devices. Everyday products and machines can now be embedded with sensor technology to process data or interact with other electronic devices.
For example, consumer-level IoT products include things like Amazon’s (AMZN) Echo “smart speaker,” wearable motion and activity tracking products, and advanced in-car technology. On the commercial side of the IoT market, industrial manufacturers have begun implementing sensors into machines to track performance and efficiency.
As demand for the microchips that power these IoT devices continues to grow, semiconductor manufacturers with a focus on IoT products will continue to benefit. With that said, we’ve found three already-strong stocks that are looking to benefit even more from further IoT growth.
Nvidia is one of the biggest names in the industry, and the company has recently seen strong growth in its Internet of Things presence with its Tegra automotive systems brand and several new artificial-intelligence based technologies being incorporated into driverless car projects. NVDA currently has a Zacks Rank #2 (Buy). Our consensus estimates point to EPS growth of 150% and sales growth of 50% in the current quarter.
2. Intersil Corporation
Intersil Corporation is a leader in the design and manufacture of high-performance analog semiconductors that have a variety of applications. Intersil’s products are used in industrial controls, automotive infotainment, and medical devices that are either already IoT-enabled or are on the cusp of being an IoT system. As for right now, Intersil has a Zacks Rank #2 (Buy), as well as a “B” grade for Growth and an “A” grade for Momentum.
STMicroelectronics is a French-Italian semiconductors company that develops circuits and discrete devices for use in microelectronic devices. The company specifically tailors its tiny, low-power technology for use in a wide range of Internet of Things products. STMicroelectronics is also a Zacks Rank #2 (Buy), and it looks like its targeting of the IoT market is starting to pay off; our consensus estimates indicate that the company could see double-digit sales growth this quarter and next quarter.
Bottom Line
The semiconductor industry has been able to ensure its future growth by adapting its business to fit changing consumer behavior. The Internet of Things is growing. Demand for IoT products is growing. That means someone is going to have to make the chips that enable these products. Look for these companies to benefit greatly from this increased demand.
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3 "Internet of Things" Stocks to Buy Now
For most of 2016, semiconductors were one of the hottest industries to invest in. While that strength has cooled off a bit, the industry is still seen as a high-growth opportunity thanks to the increasing demand for small, high-powered chips that enable “Internet of Things” (IoT) devices.
For those that don’t know, the Internet of Things refers to the growing world of interconnected household and industrial devices. Everyday products and machines can now be embedded with sensor technology to process data or interact with other electronic devices.
For example, consumer-level IoT products include things like Amazon’s (AMZN) Echo “smart speaker,” wearable motion and activity tracking products, and advanced in-car technology. On the commercial side of the IoT market, industrial manufacturers have begun implementing sensors into machines to track performance and efficiency.
(Also Read: How to Invest in the "Internet of Things")
As demand for the microchips that power these IoT devices continues to grow, semiconductor manufacturers with a focus on IoT products will continue to benefit. With that said, we’ve found three already-strong stocks that are looking to benefit even more from further IoT growth.
1. Nvidia Corp. (NVDA - Free Report)
Nvidia is one of the biggest names in the industry, and the company has recently seen strong growth in its Internet of Things presence with its Tegra automotive systems brand and several new artificial-intelligence based technologies being incorporated into driverless car projects. NVDA currently has a Zacks Rank #2 (Buy). Our consensus estimates point to EPS growth of 150% and sales growth of 50% in the current quarter.
2. Intersil Corporation
Intersil Corporation is a leader in the design and manufacture of high-performance analog semiconductors that have a variety of applications. Intersil’s products are used in industrial controls, automotive infotainment, and medical devices that are either already IoT-enabled or are on the cusp of being an IoT system. As for right now, Intersil has a Zacks Rank #2 (Buy), as well as a “B” grade for Growth and an “A” grade for Momentum.
3. STMicroelectronics N.V. (STM - Free Report)
STMicroelectronics is a French-Italian semiconductors company that develops circuits and discrete devices for use in microelectronic devices. The company specifically tailors its tiny, low-power technology for use in a wide range of Internet of Things products. STMicroelectronics is also a Zacks Rank #2 (Buy), and it looks like its targeting of the IoT market is starting to pay off; our consensus estimates indicate that the company could see double-digit sales growth this quarter and next quarter.
Bottom Line
The semiconductor industry has been able to ensure its future growth by adapting its business to fit changing consumer behavior. The Internet of Things is growing. Demand for IoT products is growing. That means someone is going to have to make the chips that enable these products. Look for these companies to benefit greatly from this increased demand.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>