Well, he didn’t quite say that. But the next wave of the Internet revolution is upon us… and it is known as the “Internet of Things”.
If you don’t know what this is, and what it means for you as an investor, read on….
The Internet of Things is what people are calling the next wave of Internet-connected devices. Think smart thermostats like Nest, fitness trackers like Fitbit, GoPro cameras, and smartwatches. Already there are Internet-connected refrigerators that will alert you when you are low on milk, “tech” shirts that track your vital signs, and sprinkler systems that shut themselves off when it is raining.
Those are nice features, but the potential uses of the Internet of Things will go much farther than consumer devices. More and more, our cars, factories, businesses, infrastructure (stoplights, parking spaces, roads, bridges, etc), trains, planes, and everything in between will be connected and “smart”, and be able to provide real-time data that will improve safety, efficiency, productivity, and usability.
Eventually, just about every device will be connected to the Internet. We’re talking billions of devices, and all that connectivity adds up! According to Fortune Magazine, estimates for consumer and business spending on these new devices have ranged from $1.9 trillion to $19 trillion. That’s a game changer and a HUGE opportunity for investors!
So, for investors who want to make money from this NOW, what’s the best approach?
A good comparison is to think about the gold rush days in California. Who made all the money? Was it the miners and prospectors who went out and found the gold, or the companies who sold the miners clothes, boots, picks, shovels, etc?
It was the companies who provided the tools who made all the money.
So instead of focusing on those companies that are making these new Internet-connected products, let’s focus on the companies that are providing what’s inside these products.
What makes all these devices run are computer chips (also called integrated circuits or semiconductors). Chips are the brains of these devices, and they are what makes all the connectivity possible.
All these billions of connected devices will need billions of chips that provide the analog and digital processing, sensors, and power management that enable everything to work and talk with each other.
Not only that, the current demand for these chips is enormous. According the research tracker IDC, nearly 500 million smartphones are expected to be sold this year in China alone. All of these smartphones have one or more chips inside that control the phone’s features.
Let’s now take a look at a list of publically traded chip company stocks.
Below is a list of chip companies, in no particular order:
Applied Materials (AMAT)
ARM Holdings (ARMH)
Sierra Wireless (SWIR)
Linear Technology (LLTC)
Silicon Labs (SLAB)
NXPI Semiconductors (NXPI)
Microchip Technology (MCHP)
Ruckus Wireless (RKUS)
Skyworks Solutions Inc. (SWKS)
Micron Technology, Inc. (MU)
Axcelis Technologies (ACLS)
Mattson Technology Inc. (MTSN)
Intersil Corporation (ISIL)
Mellanox Technologies, Ltd. (MLNX)
Monolithic Power Systems Inc. (MPWR)
Silicon Image, Inc. (SIMG)
Inphi Corporation (IPHI)
Lattice Semiconductor Corporation (LSCC)
PMC-Sierra Inc. (PMCS)
Exar Corp. (EXAR)
Cypress Semiconductor Corporation (CY)
Integrated Device Technology, Inc. (IDTI)
So how do you pick the best Internet of Things chip stocks in this list? Here are three tips you can follow for the maximum chance of success:
This simple system is what separates investors who consistently make money from those who get poor results.
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