Finder makes money from featured partners, but editorial opinions are our own.

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 in Australia should be wary of emerging data regulations before they invest in Internet of Things stocks.

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
  • Fitbit
  • 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 in Australia.

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 $US100 billion in market revenue in 2017, according to Statista. And it’s forecast that by 2025, the industry will be worth $US1.6 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 in Australia the chance to back a fast-paced sector with promising growth projections.

Risks of investing in Internet of Things stocks

Economic downturns 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 is only one ETF that specifically tracks IoT stocks: the Global X Internet of Things Thematic ETF (SNSR). This fund has more than $US231 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.

Name Product Price per trade Inactivity fee Asset class International
eToro
Finder AwardExclusive
eToro
$0
US$10 per month if there’s been no log-in for 12 months
ASX shares, Global shares, US shares, ETFs
Yes
Finder exclusive: Get 12 months of investment tracking app Delta PRO for free when you fund your eToro account (T&Cs apply).
CFD service. Capital at risk.
Join the world's biggest social trading network when you trade stocks, commodities and currencies from the one account.
CMC Invest
Finder Award
CMC Invest
$0
$0
ASX shares, Global shares, Options trading, US shares, ETFs
Yes
$0 brokerage on US, UK, Canadian and Japanese markets (FX spreads apply).
Trade over 45,000 shares and ETFs from Australia and 15 major global markets. Plus, buy Aussie shares or ETFs for $0 brokerage up to $1,000 (First buy order of each security, each day - excludes margin loan settled trades).
Moomoo Share Trading
US$0.99
$0
ASX shares, Global shares, US shares, ETFs
Yes
Finder exclusive: Get $100 to trade when you deposit $1,000, or $200 when you deposit $5,000 or more. Earn 6.8% p.a. on uninvested cash. T&Cs apply.
Trade shares on the ASX, the US markets and buy ETFs with Moomoo. Plus join a community over 20 million investors.
Tiger Brokers
US$2
$0
ASX shares, Global shares, US shares, ETFs
Yes
Finder exclusive: 10 no-brokerage US or ASX market trades in the first 180 days + 7% p.a. on uninvested cash with first deposit of any amount, plus US$30 TSLA + US$30 NVDA shares with deposits up to AU$2000. T&Cs apply.
Trade Australian, US and Asian stocks with no minimum deposit on Tiger Broker’s feature-packed platform.
Webull
US$0.25
$0
ASX shares, Global shares, Options trading, US shares, ETFs
Yes
Get advanced research and trading tools with $0 brokerage and free lvl 2 NASDAQ stock data for 30 days. T&Cs apply.
Trade ASX and US stocks and US options, plus gain access to inbuilt news platforms and educational resources. You can also start trading for less with fractional shares.
Saxo Invested
US$1
$0
ASX shares, Global shares, Options trading, US shares, ETFs
Yes
Access 22,000+ stocks on 50+ exchanges worldwide
Low fees for Australian and global share trading, no inactivity fees, low currency conversion fee and optimised for mobile.
Go to site
loading

Important: The standard brokerage fee displayed is the trade cost for new customers to purchase $1,000 of either Australian or US shares. Where a platform charges different fees for both US and Australian shares we show the lower of the two. Where both CHESS sponsored and custodian shares are offered, we display the cheapest option.

Bottom line

Internet-connected technology is growing at an impressive rate, with global market projections on track to crack $US1 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 guides on Finder

Ask a Question

You are about to post a question on finder.com.au:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms Of Service and Finder Group Privacy & Cookies Policy.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
Go to site