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Major technology trends like artificial intelligence dominate headlines. But some niche plays like the Internet of Things (IoT) offer significant potential despite lower hype, according to tech investor Richard Clode. Clode, fund manager at Janus Henderson Investors, named NXP Semiconductors and Impinj as two IoT stocks he sees as long-term winners. He manages the $3.2 billion Horizon Global Technology Leaders Fund, which is invested in both stocks. One IoT technology he sees hitting its stride is radio frequency identification (RFID) for supply chain tracking. RFID uses small wireless chips to track inventory and assets. It was hailed in the early 2000s as a breakthrough in supply chain visibility. But the technology was too expensive and unreliable back then. NXPI PI 1Y line “The best time to invest in technologies is when they’ve just gone through that revulsion phase of no one ever wants to talk about that technology and because everyone’s been burned,” Clode said, pointing to the lull in news on IoT right now after grabbing headlines five or six years ago. With costs down, performance improved and after years of piloting, Walmart and UPS are rolling out RFID on a massive scale to tag shipments. “Walmart was using RFID in apparel and is now mandated for all of its suppliers in pretty much every category: ‘If you want to supply Walmart, you have to tag every item,'” Clode told CNBC’s “Pro Talks,” highlighting the proliferation of the technology. “We are seeing a lot of these technologies; they are real, they are proliferating, and they are enabling much more efficiency in these supply chains in these retailers,” he added. “I think that’s a great example of how we see the real side of the Internet of Things, or Smarter Cities playing out rather than kind of that umbrella term that’s a bit general and vague, and there’s no specifics behind it.” Clode said NXP and Impinj are the dominant makers of RFID chips today that will benefit from this trend. Their specialty chips that can transmit information wirelessly without batteries or line of sight make them ideal for supply chain applications. U.S.-listed Dutch multinational NXP Semiconductors is the more prominent player best known for automobile microchips, with a $58 billion market cap. Impinj focuses purely on RFID chips and has a smaller $2.4 billion valuation. The analysts’ consensus price target points towards a 45% upside for the next 12 months for the stock.
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