AI and IoT: The Ultimate Combination of Technological Advances?

If you keep up with technological advances, you’ll know the internet of things (IoT) is making our devices and their data increasingly interconnected — and predictions suggest there will be 75 billion devices of this kind by 2025. Meanwhile, AI has applications that range from automating manual tasks to analyzing data. Yet an even more exciting discussion is how these technologies can combine to offer more powerful solutions — sometimes called artificial intelligence of things (AIoT).

Let’s look at some of the uses of AIoT in manufacturing, smart cities, autonomous vehicles, and more — and some of the companies driving the innovation.

Understanding the rise of AIoT

Ultimately, IoT is all about collating and sharing data. IoT devices take data — often through sensors or software — and share it with a wider network or through the cloud. A simple example is a smartwatch that collects data about a wearer’s heart rate during exercise and sends it straight to a connected app.

The problem is that raw data alone isn’t particularly useful. Would you prefer to know your heart rate throughout the day or to have an overview of what those numbers mean for your fitness and health goals? For most people, it’s the second option — and this is where AI comes in. AI can process and analyze data, making it capable of making conclusions, predictions, and even decisions. This leads to much more powerful insights and applications, and removes the need for humans to oversee certain processes.

But the potential of the marriage between AI and IoT gets much more exciting than smartwatches. Let’s take a look at where some of the most promising opportunities lie, and the companies that should be on the radar of anyone looking to invest.

Smart cities

Smart cities use technology to be more efficient and sustainable. They do this partly by using sensors that collect data about different infrastructures and behavior, and implementing changes based on the information. For example, cameras and sensors may show there are congestion issues in one area of the city and change traffic light patterns to help clear it up. IoT is responsible for taking the data, but AI is needed to understand it and make decisions without human intervention.

Another exciting innovation in this space is digital twins, which can create a digital simulation of a city to test out different policies or models — for instance, to examine how equipment or buildings can operate more sustainably. Various cities have started to use them already, including Las Vegas and Mannheim.

Companies like Microsoft (MSFT) offer software that allows organizations to create digital twins. Microsoft Azure already has various partners in this space, including the city of Valencia, which used the software to model a lighting upgrade. General Electric (GE) is also a market leader.

Autonomous cars

Autonomous cars will also need AI and IoT to reach peak performance. They need to be able to analyze data in real time based on factors like traffic suddenly stopping or the weather changing. This could also apply to other self-driving vehicles.

One of the most obvious leaders in using this technology is Tesla (TSLA), but vehicle manufacturers aren’t the only ones benefiting from the innovation. Companies that create chips play a vital role in guaranteeing the performance level needed. For instance, semiconductor company Qualcomm (QCOM) is including the combination of AI and IoT in its roadmap for the future. 


Like smart cities, manufacturing sites use sensors to collect data about information (such as inventory in a warehouse or where items are in a supply chain). As a result, they can also use AI to improve their efficiency and performance — it can offer recommendations based on shortages or problems it notices in supply chains and identify ways to modify processes.

For instance, Siemens (SIE) has developed a service solution called MindSphere for industrial applications. This uses IoT and AI to help plants optimize their processes and develop better products. 

Workplace productivity

IoT and AI technology can also be used to improve the productivity of individuals and create more comfortable workplaces. Google’s (GOOG) Nest has created a smart thermostat, which uses a combination of AI and IoT to regulate temperatures for a specific individual based on the times they work and their preferred climate.


So far, the robots humans have created have mostly been quite rudimentary and cannot perform the kinds of tasks that come easily to humans. However, as AI becomes more sophisticated and is able to make more sense of data from sensors and cameras, autonomous robots are a real possibility. 

Autonomous robots could be used in industry to improve efficiency and make conditions safer for humans. Some estimates suggest that as much as 40% of the workforce could be displaced within 15 years due to the potential of AIoT and similar innovations. Plus, companies like Amazon are already preparing for this shift by re-educating the workers they think will be obsolete.

Wherever this technology leads us, investors have a number of different opportunities to pursue.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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