We recently compiled a list of the 14 Best New Tech Stocks To Buy Now. In this article, we are going to take a look at where Samsara Inc. (NYSE:IOT) stands against the best new tech stocks to buy.
Tech Stocks Should Not Be Divested From
Tech stocks have long gained the attention of investors, with tech giants helping the S&P 500 climb a staggering 400% from 2009 to 2022. The Nasdaq 100 index did even better, surging over 700% in the same period.
However, the first half of 2022 saw a brutal market correction, the worst in 50 years for Wall Street. Geopolitical tensions, skyrocketing energy prices, and rising interest rates all played a part. Tech stocks took a heavy hit, with large tech companies dropping as high as 39% at one point.
Tech stocks are risky investments. When money was cheap during the pandemic, people borrowed a lot and invested in tech and crypto. This made the prices go up very high, overvaluing the tech sector. But when central banks raised interest rates, people started selling tech, which made the prices go down.
Earlier this week, we posted an article 10 Best Emerging Tech Stocks to Buy Now, where Mad Money host and former hedge fund manager Jim Cramer said that tech stocks should not be divested from. Here’s an excerpt from that article:
“He (Cramer) believes that major technology firms, which are integral to ongoing robust trends like data centers and accelerated computing, should be viewed as attractive buying opportunities when the market weakens, instead of the opposite sentiment…. September is historically the weakest month for the market, with consistent profit-taking. But, he sees this as a circular argument rather than a sign of an economic downturn. He believes the broader selling pressure in September is due to tech stocks meeting but not exceeding expectations.”
This is especially important to absorb as we see more and more analysts move away from the anticipation of a recession. Anastasia Amoroso, iCapital chief investment strategist, says that despite signs of a weakening labor market, such as rising unemployment and increased layoffs, she does not foresee an imminent recession. The market is expecting a 25-basis point rate cut from the Fed, possibly a larger 50-basis point cut if economic indicators worsen.
The economy is still growing at a rate of 2%, although it’s slower than before. Amoroso noted that key economic indicators do not suggest a high probability of a recession. While the market is cautious, there is potential for a positive outlook. Rate cuts and a slowing economy could lead to a more favorable market environment.
IPO Outlook
EY Global IPO Trends Q2 2024 reported that in the first half of 2024, global IPO activity experienced a downturn, with volumes declining by 12% (551 listings raising a total of $52.2 billion in capital) and proceeds declining by 16% compared to the previous year.
For the first time in 16 years, the EMEIA region reclaimed the top spot in terms of global IPO market share by number of deals. Industrials emerged as the leading sector in terms of the number of IPOs, while the technology sector raised the most capital through IPOs.
Earlier this year in May, Goldman Sachs Chair and CEO, David Solomon, at a Summit in France, said he is concerned that fewer companies are going public but expects IPO activity to pick up in the second half of 2024.
Solomon provided insights into the recent volatility in equity markets and noted that trillion-dollar companies were experiencing significant swings of up to 10% post-earnings. He acknowledged that such volatility could stimulate business activity, but expressed concerns about the potential narrowing of public markets.
He believes hyper-scalers have grown due to their competitive edge and recent tech advancements. Despite market volatility, he trusts in its efficiency and the importance of public markets for capital allocation and transparency.
Solomon expressed concern over the declining number of public companies due to abundant private market capital and emphasized the need for open, inclusive public markets. While the IPO market has recently revived, he anticipates a gradual increase in activity in the second half of 2024, going into 2025, though less intense than in 2021. However, the trend of companies staying private longer contributes to the overall decline in publicly traded entities.
Recently, CNBC’s Deidre Bosa talked about the significant energy demands of AI and the efforts of tech giants to address this growing need. She highlighted some recent big-tech investments in data centers and nuclear power facilities to back up her claim.
Jensen Huang admitted the related high energy costs but noted AI’s potential to develop energy-saving solutions. Bosa and Huang agree that public-private partnerships are crucial for addressing AI’s energy consumption. While training AI models is energy-intensive, the long-term benefits in areas like healthcare, climate, and grid management outweigh the costs. Both believe AI can revolutionize energy efficiency through innovative solutions.
Amoroso’s insights suggest that the overall economic outlook does not indicate a recession, while Bosa and Huang foresee higher tech investments due to growing AI demand. So with caution and strategic adjustments in investment approaches, potential investment risks can be avoided in the tech sector
Methodology
We used stock screeners to look for companies that went public in the past 3 years. We sorted our screen by IPO date and market cap and looked through the top 30 stocks that went public in the last 3 years and are trading over $1 billion. We then selected 14 stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q2 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Samsara Inc. (NYSE:IOT)
Market Capitalization as of September 13: $25.74 billion
Number of Hedge Fund Holders: 26
Samsara Inc. (NYSE:IOT) is a leading provider of Internet of Things IoT solutions for businesses, offering a single platform for fleet operations at scale. It specializes in connected operations technology, offering a suite of products and services that help organizations manage their physical assets, improve efficiency, and enhance safety. Products include real-time GPS, AI-powered dash cams, routing, and driver apps.
In the fiscal second quarter of 2025, the company added 169 customers with more than $100,000 in ARR and a quarterly record of 14 customers with over $1 million.
The company made $300.20 million in revenue in FQ2 2025, recording a 36.92% year-over-year improvement. The earnings per share were $0.05.
Samsara Inc. (NYSE:IOT) collects 10 trillion data points annually which helps customers tackle challenges. At Samsara Beyond this year in June, 2,000 attendees discussed data and AI for Connected Operations and revealed that their top priorities include creating a system of record for their operations, standardizing their data, and using more AI for insights.
It honored 15 global customers in 2024. Home Depot, with Temco Logistics, reduced auto incidents by 80% using Samsara’s video safety app. Sterling Crane saved $1.2 million through improved driver productivity and compliance.
Recently, it launched Asset Tag, an industrial-grade Bluetooth tag for tracking small assets, helping customers save money by increasing asset utilization, preventing loss, and improving worker efficiency. In Q2, it generated $1 million in new annual contract value.
The company is transforming the worker experience with technology. Its Connected Workflows product automates multistep workflows, making work safer and easier. All these applications position the company for success. As of FQ2 2025, it’s held by 26 hedge funds, of which the largest stake is at $49,665,274 by Atreides Management.
Baron Opportunity Fund stated the following regarding Samsara Inc. (NYSE:IOT) in its Q2 2024 investor letter:
“We initiated a position in Samsara Inc. (NYSE:IOT) during the quarter. Samsara provides a cloud software platform for commercial vehicle telematics, video-based driver safety, driver workflow automation, and industrial equipment monitoring. Its software collects and analyzes data from sensors and cameras installed in its customers’ commercial trucks, construction equipment, warehouses, and other assets, helping companies visualize and improve the state of their operations. More than 17,500 customers in the transportation, field services, construction, utilities, and other industries have adopted Samsara, and last year the company became one of the fastest software companies ever to reach $1 billion in annual recurring revenue (ARR). Samsara has been winning share from competitors in the $51 billion connected fleet software market due to its superior cloud native architecture, ability to address multiple use cases in a single platform, and its rapid product release cycle. As Samsara continues to expand its connected asset base, it is building an unmatched data asset that it is using to drive better outcomes for its customers. Capturing more than 9 trillion data points from over 44 billion hours of camera footage across millions of miles driven, Samsara uses AI to help companies optimize their vehicle routes, prevent accidents, improve asset utilization, reduce fuel expenses, and lower insurance premiums. In 2023, across its customer base, the company prevented 200,000 accidents and reduced carbon emissions by 2.3 billion pounds. We see a long runway for growth as Samsara expands in existing accounts and wins new logos. Samsara is less than 50% penetrated in its existing customers’ vehicle fleets and has a significant opportunity to cross-sell newer non-vehicle products (which already account for $125 million of ARR) into its base. The company has also increased its customer count by more than 20% year-over-year every quarter and identified hundreds of thousands of potential new accounts to win. As it has scaled, Samsara has delivered healthy operating leverage, and we think free cash flow margins can ultimately expand beyond 20% longer term.”
Overall IOT ranks 14th on our list of the best new tech stocks to buy. While we acknowledge the potential of IOT as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than the stocks on our list but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
