A big part of the AI buildout involves the use of that technology to power automated and internet-assisted vehicles (or “connected cars”), as well as industrial automation and other wide-ranging applications.
Integral to these AI-driven developments is Internet of Things (IoT) technology that enables physical devices to collect and exchange data through the internet, in turn allowing for real-time monitoring, automation and data-driven decision making across various industries.
Driving this revolution is the semiconductor industry, which is critical for the development of AI-driven development of IoT, since it provides the necessary hardware (chips, sensors and the like) that power AI processing at the edge and enable IoT connectivity.
What’s more, AI models at the edge use high-performance chips that can process data locally with minimal power use, which means advancements in semiconductor development power breakthroughs in AI capabilities with greater energy efficiency.
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With this in mind, let’s examine a couple of attractive IoT stock turnaround candidates within the broader semiconductor space that are either paramount players on the cutting edge of some key IoT trends, or are otherwise actively contributing to the IoT buildout.
2 Undervalued IoT Stocks to Buy Now
Cohu Inc. (COHU) is a global provider of products and services for semiconductor makers and their test subcontractors, including test handlers, automated test equipment, inspection and metrology systems and data analytics. The company is known for its focus on optimizing yield and productivity in semiconductor manufacturing.
Significantly, Cohu’s test equipment and services are necessary for ensuring the quality and reliability of IoT devices. Its offerings include testing solutions for sensors, MEMS (Micro-Electro-Mechanical Systems) and connectivity components used in various IoT applications, and the firm’s solutions cater to IoT’s specific needs, which includes testing delicate semiconductors, while also offering cost-effective testing for high-volume production.
Among the key markets Cohu serves within the IoT space are “smart” homes, wearables, industrial automation and connected vehicles. On the latter front, its Internet of Vehicles (IoV) offerings are considered leading edge, and they include solutions for advanced driver systems (ADAS) and autonomous driving technologies.
As a critical player in the IoT and IoV semiconductor markets, Cohu is well positioned to benefit from technological growth trends that are expected to accelerate in the coming years.
Sandisk (SNDK) is a supporting player for the IoT industry—particularly in the automotive and industrial spaces—as it provides the necessary storage infrastructure to enable the growth and functionality of various IoT devices and applications.
Specifically, the company develops, manufactures, and sells data storage devices and solutions using NAND flash technology in the U.S. and globally, which are specifically designed for the rigorous demands of IoT devices. Sandisk also provides solid state drives for desktop and notebook PCs, gaming consoles and set top boxes, as well as flash-based embedded storage products for mobile phones, tablets, notebook PCs and other portable and wearable devices, automotive and other applications.
The California-based company is a spinoff from Western Digital (WDC), which was completed in February and was led by activist investor Elliott Management.
Western Digital originally purchased Sandisk six years ago for $19 billion, which at the time was viewed as “nothing less than transformative,” according to Elliott, and which helped push Western beyond its hard disk drive (HDD) reputation into one of the biggest players in the flash memory market.
However, none of the anticipated benefits from the merger were realized, prompting Elliott to take action by urging Western Digital to spin off the flash memory business in a call for Sandisk to be the overall shareholder value of Western Digital.
A growing number of analysts believe Sandisk is on the verge of a successful turnaround, with management projecting that Sandisk could generate revenue of $7.5 billion this year, up 13% year-on-year if realized, and possibly reached $10 billion annually within three years. The company also believes it can generate positive free cash flow at a $10 billion per year revenue level.
Wall Street sees earnings of $2.06 a share this year, with EPS forecast to more than double in fiscal 2026. All told, SNDK looks like an IoT stock with a solid turnaround story.
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