Introduction

Major technology trends often dominate headlines, with artificial intelligence being one of the most talked-about topics. However, according to tech investor Richard Clode, there are niche opportunities like the Internet of Things (IoT) that offer significant potential despite receiving less hype.

IoT Stocks with Long-Term Potential

Clode, who manages the $3.2 billion Horizon Global Technology Leaders Fund, believes that NXP Semiconductors and Impinj are two IoT stocks poised to be long-term winners. His fund is invested in both companies.

The Rise of RFID for Supply Chain Tracking

Clode highlights radio frequency identification (RFID) as an IoT technology that is gaining momentum. RFID uses small wireless chips to track inventory and assets in supply chains. Although it was initially hailed as a breakthrough in supply chain visibility in the early 2000s, the technology was too expensive and unreliable back then.

Timing the Investment

Clode suggests that the best time to invest in technologies is when they have gone through a period of revulsion, where nobody wants to talk about them. He points out that IoT has experienced a lull in news coverage after being in the spotlight five or six years ago. However, with costs reduced and performance improved, companies like Walmart and UPS are now implementing RFID on a massive scale to tag shipments.

Real-World Impact

Clode emphasizes that IoT technologies, such as RFID, are becoming more prevalent and enabling greater efficiency in supply chains for retailers like Walmart. He believes that this tangible impact is a better reflection of the true potential of IoT, rather than the broad and vague umbrella term it is often associated with.

NXP Semiconductors and Impinj: Leading RFID Chip Makers

Clode identifies NXP Semiconductors and Impinj as the dominant players in the RFID chip market. These companies specialize in chips that can wirelessly transmit information without batteries or line of sight, making them ideal for supply chain applications. NXP Semiconductors, a U.S.-listed Dutch multinational, is best known for its automobile microchips and has a market cap of $58 billion. On the other hand, Impinj focuses solely on RFID chips and has a smaller market valuation of $2.4 billion. Analysts’ consensus price target suggests a 45% upside for the stock over the next 12 months.