Samsara Inc. (IOT): A Bull Case Theory

We came across a bullish thesis on Samsara Inc. on TCompounding Your Wealth’s Substack by Sergey. In this article, we will summarize the bulls’ thesis on IOT. Samsara Inc.'s share was trading at $36.77 as of August 6^th. IOT’s forward P/E was 88.50 according to Yahoo Finance.

Samsara (IOT) is a leading player in the Industrial IoT space, offering a Connected Operations Cloud platform that digitizes physical operations across fleet management, asset tracking, and industrial IoT. The company’s flagship fleet segment, anchored by a $1.54B ARR growing 31% YoY, is seeing strong enterprise traction with 154 new $100K+ ARR customers in Q1. Its industrial IoT and asset tracking segments are also gaining momentum, with major customers realizing multimillion-dollar savings from operational efficiencies. Samsara’s competitive edge stems from deep integration, strong switching costs, and AI-powered capabilities, including real-time diagnostics, predictive analytics, and advanced telematics.

Its economic moat is narrow but strengthening, with switching costs and network effects forming key defenses. The company maintains a strong balance sheet, with $698M in cash and minimal debt, and has improved its operating and FCF margins significantly over the past year. While the company trades at a premium Forward P/E of 90x and PEG of 3.6, this reflects its early-stage profitability and ~30% YoY revenue growth. Still, leading indicators like billings and RPO have decelerated, and revenue growth has moderated from previous quarters.

Samsara has a projected TAM of $200B by 2026, with significant upside from AI-led innovation, international expansion (11% of revenue), and vertical integration with OEMs like Stellantis and Rivian. Despite some caution flags in leading indicators, Samsara’s valuation has pulled back to 12.55x forward EV/Sales, below historical averages. With improving unit economics, strong customer retention, and expanding product breadth, Samsara remains a high-growth story with long-term upside and a modest current portfolio weight of 4.1%.

Previously, we covered a bullish thesis on Samsara Inc. by Compounding Your Wealth in March 2025, which highlighted strong ARR growth, AI integration, and international expansion. Since then, the stock has depreciated by 4.06%. The thesis largely still stands, though recent commentary by Sergey adds nuance around moderating growth indicators, improving margins, and a strengthening but narrow moat.

Samsara Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 35 hedge fund portfolios held IOT at the end of the first quarter which was 40 in the previous quarter. While we acknowledge the potential of IOT as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.