How 5G Will Power an Innovation Revolution & Reward IoT Stocks

How 5G Will Power IoT to a Revolution of Innovation and Reward IoT Stocks5G & IoT: Perfect Match Will Pay Big Returns

The U.S. is accelerating the development and adoption of 5G technology. This push will provide strong tailwinds in the development of the Internet of Things (IoT). That, in turn, should power IoT stocks.

You may know about the current battle to slow down the 5G market leader, China-based Huawei Technologies Co., Ltd.

The concern is that, whichever country controls 5G will have a decided advantage in the development of next-generation technologies. This is the primary reason we have been seeing the massive 5G push in the U.S. and interest in IoT stocks.

Consider the technological possibilities. 5G can run up to a thousand times faster than 4G. You can imagine the incredible innovations that will emerge due to these blazing speeds.

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Also, consider that the U.S. is predominantly still running at 3G speeds—with 4G speeds in some of the larger metropolitan areas.

Nevertheless, we are blasted with commercials talking about the 5G speeds available in limited parts of the country. The problem is that the 5G technology available at this time is inferior, with speeds only slightly faster than 3G.

But 5G technology will improve as the world plays catch-up with Huawei. The company’s technology has already been launched in China and other countries. China is even already diving into 6G technology.

The point is, the race for 5G superiority will drive the development of next-generation IoT applications that require much higher speeds. One of the benefactors will likely be investors in IoT stocks.

The concept behind IoT technology is that devices communicate with each other without the need for human interaction.

In a smart home or smart city, connected devices will create a high-tech environment that could make everyday life much more manageable.

Imagine, in a remote area, a patient with no access to specialized surgery could be operated on by a robot controlled by a surgeon thousands of miles away using IoT and 5G technologies.

Or think about the connected car. The ability to develop secured and effective autonomous vehicles will be made easier via faster IoT.

Furthermore, industrial IoT applications will be huge.

The possible uses of IoT tech are endless, and only confined by one’s imagination. The faster the speeds, the better the ability of the interconnected devices to operate.

The scale of the IoT market is massive and is expected to surge, especially with the push toward 5G technologies.

Statista, Inc. estimates that the global IoT market could be about $457.3 billion this year.

Year Size of Worldwide IoT Market
2016 $157.1 Billion
2017 $194.7 Billion
2018 $249.2 Billion
2019 $330.8 Billion
2020 $457.3 Billion

(Source: “Size of the IoT market worldwide from 2016 to 2020,“ Statista, Inc., last accessed January 24, 2020.)

What Are Some of the Top IoT Stocks?

The power behind IoT technology will be critical. One major player in the hardware sphere is chipmaker NVIDIA Corporation (NASDAQ:NVDA).

This company, which had its start in producing super-fast gaming chips, is now designing some of the fastest and most powerful chips in the world. These chips are ideal for next-generation IoT applications.

Chart courtesy of StockCharts.com

In the software IoT space, a big winner will be Microsoft Corporation (NASDAQ:MSFT). Its share price has jumped about 60% year-over-year and its market cap is currently almost $1.3 trillion, making it the second most valued company worldwide, after Apple Inc. (NASDAQ:AAPL).

Microsoft was pretty much left for dead following its meltdown in 2000, but the company has been shifting into higher-growth businesses and not having to play as much defense on its legacy operating system.

Chart courtesy of StockCharts.com

Microsoft is still early in the IoT game, but it’s investing $5.0 billion in the area, primarily via its cloud platform “Azure IoT.”

Analyst Take

Get ready for massive innovations from the IoT sector, fueled by the further development of 5G technology. This could be the big difference-maker over the next few years and beyond.

While NVIDIA and Microsoft are a two of the bigger 5G and IoT stocks, there are numerous smaller ones emerging that investors might want to look into.