Top IoT Stocks: Why Samsara and Digi Are Thriving in 2025
The Internet of Things (IoT) describes a network of electronic devices outfitted with sensors to gather and share data through the internet. It enables devices (things) to share data in real time without direct human intervention.
The concept has been around since the 1990s, but it didn’t gain significant traction until broadband technology, low-power sensors, and smartphones came into existence. Thanks to 5G cellular networks, IoT has become a mainstream reality.
IoT devices can range from smart home products like thermostats, security cameras, and appliances to wearables like fitness trackers. Industrial IoT features sensors, cameras, and devices that are embedded directly into machinery. The gathered data is used to monitor, analyze and improve processes. IoT continues to evolve with the integration of artificial intelligence (AI). Here are two IoT stocks that will continue to thrive in 2025.
1. Samsara: Using IoT to Manage Vehicle Fleets, Track Assets, and Monitor Equipment
If you’ve ever wondered what Samsara Inc. (NYSE: IOT) does, just look at the stock symbol. The computer and technology sector company provides a one-stop shop for industrial IoT, offering hardware devices like cameras, telematics and tracking sensors, Software as a Service (SaaS) and its Connected Operations Cloud. The company specializes in fleet management with AI-enabled dash cams and real-time driver coaching to cut down on total accidents by 29%. Samsara has captured 1% of the vehicle telematics industry with a total addressable market (TAM) of over $19 billion. Major fleet operators and logistics companies like Home Depot Inc. (NYSE: HD), XPO Inc. (NYSE: XPO), Sterling Crane, and DHL use Samsara IoT products and services.
Blockbuster Growth Continues to Accelerate
Samsara is still in its hypergrowth stage. The company reported fiscal Q2 2025 EPS of 5 cents, beating consensus analyst estimates by 4 cents. Revenues surged 37% year-over-year (YoY) to $300.2 million, beating consensus estimates for $289.53 million. Ending ARR rose 36% YoY to $1.264 billion. Samsara grew its clients with ARR over $100,000 by 41% YoY to 2,133. The company has no debt.
Strong Fiscal 2025 Outlook and Expanding AI-Driven Opportunities
Samsara expects fiscal Q3 2025 EPS of three to four cents versus the 3-cent consensus estimates. Revenue is expected to be between $309 to $311 million, above the consensus estimates of $308.83 million. Fiscal Q4 EPS is expected between 6 and 7 cents versus the 6-cent consensus estimates, with revenue between $334 to $336 million versus the $333.95 million consensus estimate.
Fiscal full-year 2025 EPS is expected between 16 to 18 cents, above the 13-cent consensus estimates. Full-year 2025 revenue is expected between $1.224 to $1.228 billion, firmly above the $1.21 billion consensus estimate.
Samsara CEO Sanjit Biswas said, “We are operating at scale with our customers, generating more than 10 trillion data points, 85 billion API calls and 70 billion miles driven across our platform annually. Our growing data asset drives more AI-powered insights so our customers can get clear and fast ROI. Every year, the impact we make on our customers continues to compound. We're excited for the decades-long opportunity ahead.”
2. Digi International: IoT Hardware and Connectivity Solutions
While Samsara is crushing in the fleet management segment, Digi International Inc. (NASDAQ: DGII) provides Industrial IoT hardware and connectivity solutions to the mission-critical communications segment. The company offers IoT hardware such as routers, modems, system-on-modules (SOMs), and gateways that enable the connection of devices in remote locations across various environments. Its wireless IoT solutions include cellular, long-range wide area network (LoRaWAN) and Wi-Fi for industrial and enterprise applications. Digi operates in more mature markets with slow adoption ranges, like smart cities, and is more concentrated in hardware sales. For this reason, they are experiencing a slowdown that may start to gain acceleration in 2025.
Turnaround in Progress Based on Improving Core Metrics
Digi International reported a fiscal Q4 2024 EPS of 52 cents, beating consensus estimates by five cents. Net income doubled YoY to $12 million from $6 million last year. Gross profit margin was 61.1%, up 400 bps YoY. Adjusted EBITDA rose 5% YoY to $26 million. ARR rose 9% to $116 million. Cash flow improved to $26 million, up from $9 million last year. Revenue fell 6.2% YoY to $105.05 million, still beating consensus estimates for $104.16 million. Net inventory levels fell to $53 million, down from $74 million last year.
Fiscal Q1 2025 Guidance Highlights Stability and Long-Term Potential
Digi International issued in-line guidance for fiscal Q1 2025 EPS of 46 to 50 cents above the 45-cent consensus estimates. Revenue estimates were in line at $102 to $106 million versus the $104.75 million consensus estimate.
CEO Ron Konezny highlighted that as demand for efficiency grows, more customers are relying on Digi's value-added IoT solutions, reflected in their record ARR, now accounting for about 27% of total revenue.
"The longer-term demand for Digi offerings remains strong. However, global macroeconomic headwinds, particularly in industrial markets, continue to persist (for example, PMI has contracted for 23 out of the past 24 months). While the time to close deals has stabilized, it is extended compared to historical measures. Our outlook for fiscal 2025 projects our ARR to grow approximately 10%, while our revenue and Adjusted EBITDA projects to be flat year over year," Konezny said.
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