Investors are no doubt looking for the best places to put their money right now, as the coronavirus crisis wreaks havoc on the health of people across the world and its economic impact becomes more apparent.

If you’ve already built up a healthy emergency fund and are now looking to place additional funds in the market, there a few good reasons to consider Apple (NASDAQ:AAPL), Shopify (TSX:SHOP)(NYSE:SHOP), and Microsoft (NASDAQ:MSFT). These tech stocks aren’t immune to the effects of the current crisis, of course, but each of these companies has a unique position to weather this storm and come out standing on the other side. Here’s why.

Apple

First off, Apple is a behemoth of a tech company, with about $207 billion in cash at the end of 2019. This means that investors can be confident Apple will be able to weather the coming economic storm that the coronavirus is creating. The tech giant won’t have any problems meeting its debt obligations and is, in fact, already using some of its cash to expand its business as it did with its purchase last month of the Dark Sky weather app.

Aside from Apple’s financial stability, the company still has plenty of opportunities to continue growing its business. One of the most notable is the company’s wearable tech segment. Apple is a leader in both ear-worn devices (AirPods, AirPods Pro, and its Beats products) and smartwatch shipments through its Apple Watch. The company’s wearable business accounted for 8% of Apple’s total sales in fiscal 2019, up from 5% in the previous year, and the business is estimated to have yearly sales of about $20.8 billion.

With wearables continuing to become more of a must-have product for many consumers, Apple’s long-term potential here is huge. IDC estimates that worldwide wearable shipments will jump from 368 million this year to 526 million by 2024.

Additionally, though Apple is increasingly less reliant on its iPhone, the company will likely get a boost in phone sales due to demand for 5G iPhones. Apple is expected to release several new 5G-capable phones this year, in addition to the non-5G iPhone SE that debuted earlier this week. The new 5G wireless standard will allow for faster internet speeds, and many wireless carriers are already touting their 5G networks. While some consumers will be less inclined to buy a new phone during the coronavirus crisis, pent-up demand for 5G devices could still be a catalyst for Apple’s phones, even if sales take longer than usual to ramp up.

Shopify

Let’s start with one of Shopify’s weaknesses: The company’s success is directly tied to the health of business around the world. This means that as many small and large companies take a financial hit over the coming months, Shopify won’t escape the impact on its own business.

While Shopify’s management said recently that the company would meet or exceed its first-quarter revenue and adjusted operating income guidance, the company has suspended full-year guidance because of COVID-19.

But there’s still a lot potential for this e-commerce platform company to come of out this crisis stronger than it was before. That’s because Shopify already has a strong customer base of more than 1 million merchants that use the company’s platform and, once the worst is over for the economy, Shopify will be there to offer its online tools to help new businesses get up and running quickly.

Shopify currently has a very high customer retention rate, which indicates that its customers are happy with the products and service they’re receiving. Further, the company’s ability to add new customers quickly fueled revenue growth of 47% year over year in 2019.

E-commerce accounted for about 11% of all retail sales in the U.S. last year and will jump to 16% by 2023. Before the current pandemic, Shopify was already tapping into this fast-growing e-commerce market. Post-crisis, Shopify will continue to be one of the leading e-commerce platforms for businesses of all sizes.

Microsoft

Like Apple, Microsoft is in a solid financial position to ride out this pandemic. At the end of 2019, the company had $134 billion in cash, equivalents, and short-term investments. This will allow Microsoft to not just meet its financial obligations, but potentially even shop for smaller companies that could add to its tech dominance.

Financial position aside, investors should focus their attention on Microsoft’s growing cloud computing business. Microsoft still plays second fiddle to Amazon Web Services (AWS), but Microsoft’s Azure cloud service shouldn’t be underestimated. In the fiscal second quarter, Azure’s sales grew 62%, and the company now holds 18% of the cloud computing infrastructure market, up from about 13% in 2017.

Microsoft’s pivot to the cloud goes far beyond its Azure service and includes the popular Microsoft 365 services, which include Microsoft’s popular Office programs that have been reworked as software-as-a-service offerings. In the most recent quarter, the company’s cloud services helped boost its sales by nearly 14%.

Additionally, Microsoft is benefiting from its cloud-based collaboration software, Teams, which is a direct competitor to Slack. Teams had 20 million users toward the end of last year, but the pandemic has caused that figure to surge to 44 million daily active users. That figure could taper off post-pandemic, but it’s likely that some companies that have gotten Teams up and running out of necessity right now will see its value and continue using it months and even years from now.

With Microsoft already in a strong financial position and the company benefiting from the growing cloud computing market, investors would be smart to give this old tech stalwart a fresh look.

These companies won’t escape near-term volatility

It’s worth mentioning that shares of all of these companies will likely continue to experience wild swings along with the rest of the market as investors process a nearly daily stream of new economic and virus-related news. But over the long haul, these companies are poised to benefit from an eventual economic rebound and outpace the gains of the broader market as they grow.

The post 3 Top Tech Stocks to Buy Right Now appeared first on The Motley Fool Canada.

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Last week, Microsoft (NASDAQ: MSFT) made a surprising move and showed off its first new smartphone in several years. The Surface Duo has two 5.6-inch displays (connected by two hinges) and runs on the Android operating system, and the company expects to launch it in time for the 2020 holiday season.

There’s a lot that we still don’t know, including how much it’ll cost or which wireless carriers will sell it, but the debut of the device itself, even if it’s a year before it goes on sale, was enough to make headlines. If you’re a Microsoft investor, you may be having mixed feelings. After all, it wasn’t all that long ago that Microsoft tried — and failed — to take on Apple (NASDAQ: AAPL), Samsung, and other smartphone makers.

But investors shouldn’t think the introduction of the Surface Duo means that Microsoft is betting big on phones again. And they certainly shouldn’t worry if it isn’t well received when it arrives in stores next year.

Microsoft is far more than devices these days

The important thing to remember is that Microsoft is not the same company that it was when it paid $7 billion for Nokia‘s device business and related patents back in 2013. Back then, it was already years behind its smartphone competitors, and the gamble never helped it close the gap with Apple and Samsung’s popular devices.

Since then, Microsoft has reinvented itself into a cloud computing and services company. Revenues are spread out almost evenly among three main businesses. Sales from the Intelligent Cloud segment totaled $11.4 billion in the most recent quarter, representing 34% of its total. Meanwhile, Microsoft’s Productivity and Business Processes segment (which includes Office 365 subscriptions, LinkedIn, and other services) made up 33% of sales, and its More Personal Computing segment (which includes Xbox revenue, Windows licensing, and Surface device sales) accounted for 33% of revenue. But among those segments, More Personal Computing brings in the smallest share of operating income — about 30% in fiscal 2019.

That pivot has turned the tech giant into the No. 2 cloud computing company, competing effectively for its share of a global cloud market that will be worth $331 billion by 2022.

Its success in cloud-computing services is part of a larger trend among technology companies to bet on service revenue as the driver their revenues in the coming years, rather than relying on device sales. Even Apple, which for almost seven years derived more than half its revenues from iPhone sales, has changed directions and building its future on services. (That streak ended last quarter.)

So while Microsoft will soon be in the smartphone game again, investors don’t need to worry if the Duo flops or simply becomes a forgettable member of the Surface family. Microsoft has successfully made a transition from relying largely on one-time software license sales to become a dominant cloud-based software and services player. And the Duo, however successful or unsuccessful it is, won’t change that.

The post Why Microsoft Investors Don’t Need to Worry If the Surface Duo Flops appeared first on The Motley Fool Canada.

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Square (NYSE: SQ) has been a phenomenal growth stock, with the financial services company’s share price skyrocketing 375% over the past five years. But investors were unhappy with Square’s second-quarter results this year, mainly because the company’s management set revenue and earnings forecasts for the third quarter that were lower than Wall Street’s expectations.

But long-term investors should remember that selling a stock based on a company not setting forecasts as high as what analysts want isn’t a great way to make investment decisions. And some temporary investor skepticism certainly doesn’t mean the company is finished growing.

If you’re wondering whether Square still has the potential to continue growing sales and earnings over the next five years, here are a few reasons to be optimistic.

Square’s gross payment volume is on the right track

Square’s gross payment volume (GPV), which is the total dollar amount spent through the company’s payment processing platform, grew by an impressive 25% year over year to $26.8 billion in the second quarter.

The company’s recent GPV growth is part of a larger positive trend for Square’s GPV growth, which grew 30% year over year for full-year 2018.

Some investors have been disappointed with the company’s GPV because the segment has missed Wall Street’s estimates for the past few quarters. But those investors might be missing out on the fact that, aside from strong double-digit GPV growth, the company is also increasing the amount it’s making from larger and more lucrative sellers.

In the second quarter, Square said that payments from larger sellers grew 34% and accounted for 54% of GPV, up from 50% in the year-ago quarter. Adding larger merchants gives Square more opportunities to cross-sell products and services than it has with smaller merchants.

Square’s ongoing potential

Square’s growth has been nothing short of impressive, and investors have a handful of reasons to remain optimistic about the company’s future over the next five years.

First, Square’s lending business, Square Capital, provides loans to businesses and facilitated about 78,000 loans in the second quarter, totaling $528 million. That was an increase of 36% year over year, and it’s part of a growing trend for Square’s lending business. The company says that since 2014, it has lent more than $5 billion through 800,000 loans.

Second, Square is considering expanding its lending business and recently applied for a license to allow it to provide loans directly to businesses, without the need for a third-party lender. If approved, Square would be able to lend money more easily and have a more direct relationship with its borrowers, all of which would give the company a complete financial ecosystem.

And last but not least is the company’s growing revenue opportunity from its Square Cash app. Square Cash allows users to easily pay each other, and businesses, through their smartphones. The Square Cash app now has 15 million active users and has been the No. 1 free finance app in the Apple App Store for two years running.

Excluding bitcoin, the Square Cash app brought in $135 million in revenue in the second quarter and has an annual revenue run rate of $540 million. The app is important to Square because peer-to-peer (P2P) payments in the U.S. are quickly growing, and by the end of 2022, more than half of smartphone users (52%) will have made at least one P2P transaction in the past month, up from just 28% in 2017.

All of the above opportunities, along with Square’s GPV trajectory, should help the company continue to grow over the next five years and tap further into the $306 billion (by 2023) global financial tech market.

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PayPal’s acquisition of GoPay, also known as Guofubao Information Technology Co., is expected to close in the fourth quarter of this year, and is being carried out through PayPal’s China-based subsidiary, Yinbaobao Information Technology (Shanghai) Co., Ltd. The financial details of the deal weren’t disclosed.

PayPal CEO Dan Schulman said in an online statement:

We are honored to become the first foreign payment platform to be licensed to provide online payment services in China. We look forward to partnering with China’s financial institutions and technology platforms, providing a more comprehensive set of payment solutions to businesses and consumers, both in China and globally.

PayPal being the only foreign payment processing platform that’s allowed to operate in China gives the company a potentially significant advantage over its competitors as the country’s online and mobile payment processing market booms.

Why this is an advantage for PayPal

PayPal is a leader in the online payment processing space, but it’s becoming an increasingly crowded market, and smaller companies, including Square, are making big moves.

What makes PayPal’s recent move important is the size of China’s online payment market. Online payment transactions in the country doubled between 2013 and 2018, reaching $200 trillion last year. As the only foreign online payment processing company in China, PayPal now has a key advantage over its U.S. competitors in one of the largest payment processing markets.

But that doesn’t mean PayPal’s latest move will be a slam dunk for the company. PayPal will face significant challenges from Alibaba‘s Alipay and Tencent‘s WeChat Pay. Alipay and WeChat Pay account for a total of 90% of the mobile payment market in China.

Additionally, it’s still unclear how long it will take PayPal to benefit from this acquisition. The company will close the deal by the end of this year, so it could be several quarters after that before we get a better idea of how well GoPay is paying off for PayPal. It’s also unlikely that GoPay will unseat Alipay’s or WeChat Pay’s dominance at this point.

Still, investors should view PayPal’s majority stake in GoPay as a great opportunity for PayPal to target the rapidly expanding online payment market in China. As e-commerce continues to grow in China and reaches a market size of $2 trillion this year, PayPal will be able to tap into Chinese consumers’ online payment needs. About 35% of all retail sales in China occur online, compared to just 11% in the U.S.

With PayPal already a dominant force in online and mobile payments in the U.S., the company’s GoPay acquisition will make it harder for PayPal’s competitors to take on the company’s global ambitions.

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Shopify (NYSE: SHOP) has been a solid growth stock for investors, with the e-commerce platform company’s share price climbing 600% over the past three years. The company’s impressive share price growth has come as it has increased its sales at a rapid pace.

The latest example of Shopify’s trajectory comes from the company’s second-quarter results, when revenue jumped 48% year over year and non-GAAP earnings per share reached $0.14, which easily outpaced analysts’ consensus estimate of $0.02 per share.

With Shopify’s meteoric sales growth and share price gains, some investors may be wondering if the company’s best days may be behind it. To help answer that, let’s take a look at the company’s revenue growth over the past year, and one big opportunity that could keep sales climbing in the year to come.

Shopify’s current trajectory and one major growth opportunity

It’s worth taking a look at the company’s full-year 2018 sales increase to get a better understanding of just how well Shopify’s business has been performing.

Total revenue for full-year 2018 was $1 billion, which was a 59% increase year over year from 2017’s sales. Total sales have been buoyed by the company’s subscription solutions and merchant solutions revenue segments, which were up 50% and 67% in 2018, respectively.

For full-year 2019, Shopify’s management expects sales of $1.52 billion at the midpoint, which would represent a 52% year-over-year increase compared to 2018. While a year-over-year sales increase of 52% would be a slight drop compared to 2018’s growth, it still represents very impressive revenue gains, and it comes as Shopify has found new ways to bring additional merchants to its platform and sell them a growing list of services.

For Shopify to meet its full-year sales estimates and continue growing over the next year, the company is likely looking to its new fulfillment service. Shopify announced in the second quarter that it’s investing $1 billion to set up its own Shopify Fulfillment Network, which will allow merchants to store and quickly ship their inventory. The Fulfilment Network will combine inventory centers throughout the U.S. with machine learning software to predict the best locations to store and ship merchant inventory to optimize sales and profits for Shopify’s users.

The fulfillment service represents a massive opportunity for Shopify to take on Amazon in the e-commerce market further, and some analysts believe it could help the company triple its market share over the next five years and boost the company’s gross merchandise volume to $200 billion in 2023, up from $41.1 billion in 2018.

With Shopify’s Fulfillment Network just getting off the ground, investors likely still have a lot to look forward to from this growing e-commerce company. While no one can be sure what will happen with Shopify over the next 12 months, the company’s projected 52% sales growth for the remainder of the 2019 fiscal year and its massive potential from the company’s fulfillment business make it likely that Shopify will be able to continue its impressive growth over the next year.

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This uncertainty — along with the volatility that often comes with investing in growth stocks — can leave some investors wary of getting started with these types of stocks. If that’s you, then here are three companies that not only have lots of potential to keep growing, but are likely to end up as great investments for years to come.

Here’s why investors should consider HubSpot (NYSE: HUBS), Shopify (NYSE: SHOP), and Okta (NASDAQ: OKTA).

1. HubSpot

HubSpot is as a cloud-based marketing platform that helps businesses create online content, send emails, find new client leads, and manage their overall marketing strategy.

HubSpot’s business is built on the freemium model, which gives its users access to a suite of online services completely free, while providing a more comprehensive list of additional features and services for a fee. So far, this model has worked very well for the company.

In the most recent quarter, HubSpot’s sales skyrocketed 33% thanks to the company’s impressive growth from its subscription segment. Subscription revenue accounts for 95% of the company’s total sales, and in the second quarter, this segment increased 34% year over year. Rising revenue and subscription sales are a very good indicator that HubSpot’s customers like the company’s products so much that they have no problem converting from a free user to a paying one.

Additionally, HubSpot’s overall customer base is growing. HubSpot ended the second quarter with about 65,000 customers, an impressive 35% increase from the year-ago quarter. And it doesn’t appear that the company is slowing down any time soon. HubSpot’s management expects the company’s sales to jump 28% in the third quarter and is continually building out its international sales as well, which should help bring continued growth for the company’s top line.

2. Shopify

Amazon may seem like the only e-commerce game in town, but investors need to pay attention to what Shopify is doing in this space. The company provides a platform to businesses of all sizes to sell their online goods and services.

In the most recent quarter, Shopify increased its sales by 48% year over year and finished out the quarter with about 800,000 merchants on its platform. The company makes its money from its merchant solutions business (which is comprised of payment transactions, fees, and hardware sales) and its subscription solutions (which is driven primarily by subscriptions to the company’s platform). In the second quarter, merchant solutions sales popped 56%, and subscription solutions increased by 38%.

Aside from that impressive growth, the company is also expanding new services, like Shopify Plus, which gives large companies access to services specific to major brands. Shopify Plus now accounts for 26% of the company’s monthly recurring revenue, up from 23% in the year-ago quarter.

If you’re wondering if there’s any room left for Shopify to grow beyond how much it already has, just consider that the global e-commerce market will be worth $4.8 trillion by 2021, up from $2.8 trillion last year.

3. Okta

Last, but certainly not least, is the identity-as-a-service company, Okta. If you’ve never heard of such a term as identity-as-a-service, then think of Okta’s platform as a gatekeeper that gives certain users access to online information and services, while restricting others. Companies are increasingly using services like this to manage their growing amount of online accounts and information.

The opportunity for Okta and its investors comes from the fact that the identity management market will be worth $24 billion by 2025.

Okta’s second-quarter results show just how impressive the company’s growth is. Sales jumped 49% in the quarter, and subscription revenue was up 51% from the year-ago quarter. Additionally, Okta added 450 new customers in the quarter, bringing its total to more than 7,000. What’s even more impressive is that Okta is now attracting larger and more lucrative customers to its platform. In the second quarter, the company signed its first Fortune 50 company, and the average contract value from its top 25 customers has doubled over the past year.

Okta has built a strong business in the niche identity management market. And with the company’s early move in this space, Okta should be able to continue growing right along with this expanding market.

Keep an eye on these stocks

There’s no guarantee, of course, that these three stocks will generate strong returns for investors. But each one of them is already doing a fantastic job of growing their business and tapping into their respective markets. If they keep it up, investors should be rewarded over the long term.

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When it comes to economic powerhouses, China’s rapid growth has been nothing short of extraordinary. The country is currently the second-largest economy in the world, and while it’s growth has begun to cool recently, its position in the world economy isn’t changing anytime soon.

For investors wondering how and where they should invest in China, it might be good to start with iQiyi (NASDAQ: IQ), Tencent Holdings (OTC: TCEHY), and Baidu (NASDAQ: BIDU). Here’s why.

A video streaming play

While the streaming wars are heating up in the U.S. between Netflix, Amazon.com, and newcomers including Apple and Disney, China is experiencing its own video streaming boom as well. As the country’s economy has grown, it’s created a larger group of middle-class consumers who are increasingly streaming video on their phones.

That’s great news for iQiyi, a video streaming app company that was spun off from Baidu back in 2018. The company boasts an impressive paying subscriber base of about 100 million right now, and management thinks it’ll end this year with nearly 120 million paying members.

To attract more subscribers, iQiyi has been focusing much of its content spending on original shows and movies. Over the next five years, the on-demand video streaming market in China is expected to catch up with the country’s traditional pay-TV market. With the company already seeing a rapid increase in subscribers — and creating original content to attract more — all of it makes it look like iQiyi is in the perfect position to benefit as on-demand streaming grows.

Investors should keep in mind that while iQiyi has lots of potential to benefit from China’s embrace of video streaming apps, the company is still at the early stages of this trend and is likely to experience some significant volatility along the way.

A gaming and social media giant

Tencent Holdings has its hands in a number of different businesses, from its popular WeChat app to its gaming business to its growing advertising segment.

In the most recent quarter, Tencent’s sales jumped 21% year over year, which was fueled, in part, by an 8% increase in gaming revenue. The company is looking to gaming for even more growth in the coming quarters and launched 10 new games in the second quarter, up from just one in the first quarter.

While gaming is Tencent’s largest business, the company is also benefiting from WeChat’s massive popularity in China. The app is a mix of services — including, ride-hailing, food services, video streaming, music, etc. — and has more than 1 billion monthly active users. In the second quarter, WeChat was able to tap into its massive user base and increase its social network revenue by 23% year over year. In addition to Tencent’s gaming and social media potential, the company is also growing its advertising business. In the second quarter advertising revenue was up 16% year over year.

For investors looking for an internet giant in China that has a long list of ways to benefit gaming and social media, there may be no better bet than Tencent.

The king of search

Baidu is one of the largest internet companies in China and a leading search engine there. The company has 76% of the search market in China and continues to attract more users to its apps and services. In the most recent quarter, Baidu’s mobile app reached 188 million daily active users, a gain of 27% year over year.

Additionally, the company is pursuing the fast-growing virtual assistant market, with the company’s DuerOS assistant now found in 400 million devices, which is about 4.5 times the number of devices from the year-ago quarter. The explosion of growth for smart assistants and smart speakers in China will create a $37 billion market by 2025, and Baidu is positioning itself now to benefit.

Baidu’s financial performance has been a bit volatile over the past several quarters, but instead of being scared off from Baidu because of this, investors may want to look at it as a buying opportunity. As some investors have fled Baidu’s stock, it’s left the company’s shares trading at just nine times its trailing earnings.

Investors looking for a Chinese tech giant investment that still has plenty of room for more growth — and that’s pursuing other revenue opportunities — should take a closer look at Baidu.

Poised to overcome uncertainty

Investors should expect some volatility from Chinese stocks right now as the U.S. and China continue their trade disputes and as China’s economy slows down from its previous meteoric growth. But long-term investors should keep a close eye on these Chinese companies as each has positioned itself well in its respective market to keep growing in the coming years.

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Adding Seinfeld to its video library may be more important than Netflix investors might initially think. Why? Because licensed content still makes up the largest percentage of what people actually watch on Netflix.

Who is watching what?

This year, Netflix will spend about $15 billion to create and license video content, with much of that going directly to fund original shows and movies. It’s part of the company’s overall strategy, which has been happening for years, to create more of its own original content and rely less on licensed programming.

While the company has had some undisputed original content hits, licensed content still accounts for the majority of actual viewing by Netflix subscribers. At the end of last year, 37% of all Netflix video streams were original content, meaning that 63% was licensed content.

While the viewing balance has been continually moving toward more original content, these percentages show how important paying for licensed programming still is to Netflix.

The timing of this latest streaming deal isn’t a coincidence, either. Netflix is losing Friends in 2020 — its third-most-watched show at the end of 2018. And it will lose The Office — the most-watched show on Netflix — in 2021. By adding Seinfeld to its platform, Netflix is looking for another sitcom classic to fill in the gap for the next few years.

Netflix is trying to strike a balance

Buying the streaming rights to a show that hasn’t aired a new episode in over 21 years — especially when you’re trying to focus on original programming — may seem like an odd strategy, but Netflix knows that its viewers still enjoy popular sitcoms. And striking a balance between original and licensed content has never been more important for the company.

Netflix lost U.S. subscribers in the most recent quarter, the first time it’s done so since 2011. Investors took notice and have pushed the company’s share price down about 18% since then.

There’s already some evidence that Netflix’s subscribers may be returning, with a Bank of America analyst writing recently that downloads of the company’s app are on the rise.

That’s good news, considering that the video-streaming wars are about to get even more intense once Apple and Disney launch their new streaming services in November.

The bottom line

It’s unclear if Netflix will earn back subscribers or grab new ones when it begins streaming Seinfeld in about 15 months, but the move shows that the company understands the importance of creating original programming while still giving its customers access to classic shows they love. If the company can continue to strike that balance, there’s no reason why Netflix shouldn’t be able to continue growing.

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When objects from doorbells to manufacturing equipment are connected to the Internet, they become part of a fast-growing tech trend: the Internet of Things, or IoT.  Here are five facts that prove just how important the IoT is and how it’s growing.

1. IoT devices will soon account for more than two-thirds of the AI chip market

Recent data shows that the IoT is likely to be a key driver of demand for artificial intelligence chips over the next few years. A report published in December by Research and Markets asserted that 83% of all AI chips will be in IoT devices (like smartwatches, driverless cars, etc.) by 2023. Additionally, the global market for IoT devices with embedded AI chips will reach $26 billion just four years from now.

Research firm Gartner says that “AI will be applied to a wide range of IoT information, including video, still images, speech, network traffic activity and sensor data.” In short, AI and the IoT will be tethered together, creating huge opportunities for some tech companies.

For example, NVIDIA (NASDAQ: NVDA) is already moving in this direction, with the company creating graphics processing chip units (GPUs) that can be used in AI applications for driverless cars. NVIDIA is also going beyond simple chips to create entire systems that have the capacity to deliver supercomputer-like performance.

2. 5G is accelerating IoT innovation

While the development of the IoT is already in full swing, it’s going to be accelerated by the faster cellular internet connections made possible by the imminent arrival of 5G cellular networks. 5G is the next evolution in cellular connectivity and will bring wireless internet connection speeds that are up 100 times faster than 4G, with lower latency (i.e., devices will have less lag when sending and receiving data from cellular towers).

AT&T (NYSE: T) and Verizon (NYSE: VZ) have already moved into high gear on their 5G deployments, and both expect their networks to cover most people in the U.S. within the next couple of years.

Those networks will allow the telecoms to launch profitable new 5G services for connecting IoT devices, among them cars and industrial equipment. Some estimates suggest the global 5G services market will reach $619 billion in annual revenue by 2026.

3. Companies are using new IoT devices to boost existing their existing businesses

The IoT isn’t just about creating entirely new businesses from new tech. Companies, including Amazon (NASDAQ: AMZN), are using the IoT to boost their core businesses as well. Amazon’s Echo smart speakers allow users to order products from the company’s e-commerce platform easily, and research shows that Echo owners spend $400 more per year than the company’s lucrative Prime members and $700 more than the average Amazon user.

This shows how the IoT can benefit companies’ existing businesses, simply by introducing a new device to the market. Amazon may never break out its IoT sales on their own revenue line, but it will quietly benefit from the IoT by integrating smart speakers and other tech into its e-commerce business.

Look beyond the headlines

For investors trying to figure out how to benefit from the IoT, it’s best to look beyond the devices themselves, and instead look at how they fit into a company’s broader revenue picture. Amazon’s Echo smart speakers are one example of how a company can use an IoT device to drive additional sales to its core business. Internet of Things devices garner consumer attention for all of their tech bells and whistles, but investors should focus instead of how these devices convince users to spend more through a company’s core platform and services.

The post These Jaw-Dropping Facts Will Change Your Mind About the Internet of Things appeared first on The Motley Fool Canada.

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