If you're looking for the next great thing to invest in for the long term, searching for today's hottest tech trends could pay off.
Companies investing heavily in two of those trends, smart machines (and applications) and expanded Internet connectivity, should be considered for your portfolio. In addition, an old hand in tech shouldn't be forgotten either.
Smarter things
If you are a fan of the TV game show Jeopardy, you probably saw a supercomputer compete against two of the show's most successful human contestants -- and win $1 million.
Watson, named after one of the company's founders, was created by International Business Machines (IBM -9.44%). Today it has been moved from answering trivia to a much more important task: lung cancer research and treatment.
IBM has also moved on from its past -- mass producing the stodgy old desktop PC -- to bigger and better things. The company is betting that its investments in smart machines like Watson and applications that are part of the so-called Internet of Things will reverse flagging revenue growth over the last few years. IBM has had to rely on repurchasing shares and cost cutting measures like reducing employee benefits in order to pump up EPS.
IBM offers the MessageSight and MobileFirst applications to help their clients control the machines and objects that are part of the Internet of Things and streamline sales, operations, purchasing, and data storage. The applications have been used in a variety of industries including air travel, medical, insurance, telecom, and software.
Investors who keep up with the smart trends could be rewarded.
Internet of everything
Not only will smart machines and objects be connected to the Internet humans will be networked too.
One company hoping to profit off of this trend is Google (GOOGL -1.94%).
The company is of course renowned for its dominant search engine, which has been constantly improved through the years to provide a platform for its cash-rich ad business. However, there could be somewhat limited upside left because of the large market share Google already commands.
The company recognizes the need to branch out to continue growing.
Hence Google is developing wearable technologies such as networked eyeglasses, an Android-based smart watch, and ingestible sensors. The company is also creating a system of blimps that could deliver wireless Internet access to rural areas worldwide.
And speaking of wearable technologies. The long rumored smart watch from Apple (AAPL -0.01%) will become available in 2014 according to some observers.
However, Apple's current success selling iPhones, iPads, iPods, Macs, and music by the millions isn't going away anytime soon. Recent updates, a trend itself, to all of their major products should keep money flowing to Cupertino until technologies like the smart watch take hold.
CEO Tim Cook promised an "iPad Christmas" when the latest tablets were announced last month. Upgraded iPhone 5s and 5c devices have been flying off the shelves according to reports. Apple hasn't lost its magical touch in traditional consumer products.
Foolish conclusion
Companies like IBM and Google are investing in two hot trends in the tech industry and are poised to provide positive returns for shareholders who are prudent enough to wait for some of the innovations in smart machines and the Internet of everything to mature.
Apple, while also looking to profit off new ideas like wearables, still sees success in continuing to sell well established consumer gadgets. Investors who go along for the ride will be rewarded.
