In this article, we discuss the best smart city stocks to buy.
Cities are bracing for a year of significant changes as new federal guidelines and emerging technologies mix with ongoing challenges. A new presidential administration in 2025 was expected to highlight new priorities and change some existing programs, which would affect the funding cities and states rely on.
Technologies like AI, self-driving robotaxis, more electric vehicles, and alternative-fuel buses will reshape how traditional city services work. Long-term problems like lack of affordable housing, rising homelessness, and climate change are still pressing, and local governments will need to manage these changes while keeping their communities afloat and functional.
To handle this growing complexity, smart cities are now trending around the world, using data-driven solutions that allow them to plan, monitor, and optimize resources more effectively. According to Capgemini, as cities get smarter, new digital services like smart grids, on-demand transportation, and intelligent water management will alter how public services operate while generating lots of data. Urban data platforms will be utilized to manage such copious data effectively, combining and analyzing information from different city systems to make services more efficient and support bigger smart city projects.
The insights generated from these platforms also feed into advanced tools like digital twins and IoT technologies, which help city planners anticipate problems and make better decisions. Similarly, with more extreme weather events happening, cities will be focusing on making infrastructure stronger. IoT tools for flood monitoring and disaster planning protect people and resources, while smart water systems help manage shortages through recycling and better distribution.
Finally, integrating environmental health technology ensures that as cities grow smarter and more resilient, they remain places where people can live healthier, safer, and more sustainable lives.
With this outlook in mind, let’s take a look at the best smart city stocks to invest in.
Copyright: dolgachov / 123RF Stock Photo
Our Methodology
In this article, we selected the best smart city stocks from the iShares Smart City Infrastructure ETF. After manually perusing the top 25 holdings of the ETF, we picked the stocks which were most popular among elite hedge funds as of the second quarter of 2025. These 10 stocks have also received attention from Wall Street analysts and major media outlets.
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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10. AECOM (NYSE:ACM)
Number of Hedge Fund Holders: 41
AECOM (NYSE:ACM) is one of the best smart city stocks. On August 25, AECOM gained placement on the UK’s National Highways SPaTS3 framework, working in partnership with Arup.
The £495 million framework, concentrated among six providers and running through 2031, will supply National Highways with consulting and technical services to enhance safety and dependability on England’s 4,500-mile strategic routes.
This contract extends AECOM’s collaboration with National Highways, continuing the progress made under the prior SPaTS framework alongside Arup.
As per Richard Whitehead, the CEO of AECOM’s Europe & India operations:
“We will bring the full breadth of our engineering advisory expertise to this framework, supporting National Highways as it continues to enhance the efficiency, safety and resilience of England’s strategic road network.”
AECOM already works with the Department for Transport and National Highways on road projects across the country. The company will now use its technical skills to support sustainable roads and prepare England’s network for the future.
AECOM (NYSE:ACM) is a Dallas-based global infrastructure consulting firm that offers services including planning, design, engineering, and construction management, and also invests in real estate projects.
9. Hubbell Incorporated (NYSE:HUBB)
Number of Hedge Fund Holders: 42
Hubbell Incorporated (NYSE:HUBB) is one of the best smart city stocks. On August 12, Hubbell announced a definitive cash agreement to acquire DMC Power for $825 million, pending customary adjustments. DMC Power, previously owned by Golden Gate Capital, develops connector solutions for the utility and transmission market.
The acquisition bolsters Hubbell’s position in the utility sector, with demand for substation and transmission equipment rising, led by load growth, data center development, and infrastructure renewal. The company’s $1.34 billion in EBITDA in the last twelve months highlights its operational robustness.
DMC Power maintains manufacturing operations in Carson, California, and Olive Branch, Mississippi, supported by distribution centers in North America. DMC has a workforce of more than 350, and the business is expected to generate around $130 million in revenue and $60 million in EBITDA in 2026.
Hubbell President mentioned DMC Power’s swage connection system fits well with its current substation and transmission products, making its utility business stronger. DMC Power’s CEO, Tony Ward, added that working with Hubbell will speed up the use of swage technology in the industry.
Hubbell plans to pay for the deal using both cash and debt, and expects it will increase adjusted earnings per share by 2026. The deal should close by the end of 2025, depending on regulatory approvals.
Hubbell Incorporated (NYSE:HUBB) is an American producer and seller of electrical and utility products both locally and internationally. It operates through two divisions: Electrical Solutions for wiring, connectors, lighting, and controls, and Utility Solutions for power distribution, transmission, substations, and smart grids.
8. Keysight Technologies, Inc. (NYSE:KEYS)
Number of Hedge Fund Holders: 42
Keysight Technologies, Inc. (NYSE:KEYS) is one of the best smart city stocks. On September 16, Keysight Technologies and Spirent Communications confirmed that the UK Court has agreed to extend the acquisition deadline by nearly a month, resetting it to October 27, 2025.
The extension pertains to Keysight’s recommended cash offer for Spirent, announced on March 28, 2024. The acquisition is structured as a Court-endorsed scheme of arrangement under the Companies Act 2006.
Keysight indicated in a statement that China’s State Administration for Market Regulation (SAMR) is in the final stages of its review, and approval is expected soon. Securing this regulatory consent is among the remaining steps for the deal to close.
On September 9, both companies said they would seek an extension of the deadline, subject to the Court’s approval, which has now been approved. Court approval was given without stopping any Spirent shareholder from opposing the extension at the future Court Sanction Hearing.
Keysight Technologies, Inc. (NYSE:KEYS) provides comprehensive electronic design and testing solutions worldwide through its Communications Solutions Group and Electronic Industrial Solutions Group segments.
7. Xylem Inc. (NYSE:XYL)
Number of Hedge Fund Holders: 45
Xylem Inc. (NYSE:XYL) is one of the best smart city stocks. On September 11, Xylem and Amazon announced a collaboration for advanced water management technology in Mexico City and Monterrey to conserve over 1.3 billion liters of water per year.
The project will deploy Xylem Vue, a software solution that applies data analytics to spot leaks and lower water waste, aiming to conserve about 800 million liters annually in Mexico City and 560 million liters in Monterrey.
Mexico City’s water infrastructure, which caters to 9 million residents, loses as much as 40% of water to leaks in the pipes. Real-time pressure management and proactive leak detection will help repair issues quickly.
The project in Monterrey widens the existing Xylem Vue system across two additional districts, including a low-income area, while also offering high-tech leak detection technology.
Jaime Barba, General Manager at Xylem Vue, commented that capturing over a billion liters of water annually makes a crucial difference in a water-deprived region.
The initiative is integrated into Amazon’s global water stewardship plan, featuring over 30 projects meant to restore more than 14 billion liters of water.
Xylem Inc. (NYSE:XYL) builds and provides services for engineered products like pumps, water treatment systems, smart meters, sensors, software, and maintenance services for cities.
6. Credo Technology Group Holding Ltd (NASDAQ:CRDO)
Number of Hedge Fund Holders: 48
Credo Technology Group Holding Ltd (NASDAQ:CRDO) is one of the best smart city stocks. Credo disclosed on September 29 that it has wrapped up its acquisition of Hyperlume, a privately held microLED optical interconnect technology company for chip-to-chip communication.
The transaction is meant to expand Credo’s high-speed connectivity solutions with Hyperlume’s miniature LED technology, catering to the rising bandwidth demands of AI-based data infrastructure.
MicroLEDs are gaining ground as a solution for data center interconnects, since they provide fast, power-efficient, and low-latency data flow for scaling AI systems. Hyperlume employs ultra-fast microLEDs and low-energy circuits to address the bandwidth challenges of traditional electronic connections.
Credo CEO Bill Brennan highlighted that MicroLED tech helps the company provide quicker, more stable, and energy-saving solutions for AI systems, while Hyperlume CEO Mohsen Asad mentioned that it could improve computing efficiency and sustainability as AI continues to expand. It is important to note that the acquisition’s price was not revealed.
Credo Technology Group Holding Ltd (NASDAQ:CRDO) develops and delivers advanced high-speed connectivity solutions, catering to hyperscalers, original equipment and design manufacturers, optical module producers, and enterprise and high-performance computing markets.
5. nVent Electric plc (NYSE:NVT)
Number of Hedge Fund Holders: 55
nVent Electric plc (NYSE:NVT) is one of the best smart city stocks. On September 3, nVent Electric revealed the lease of a new 117,000 square feet facility in Blaine, Minnesota. The company plans to use this space to expand its data center solutions capacity amid growing interest in liquid cooling.
nVent’s Blaine facility is its second data center manufacturing expansion in two years and it is scheduled to commence operations in early 2026. The site will employ over 175 workers and specialize in delivering new solutions for data center customers, including liquid cooling technologies. The company claims to have already delivered more than 1GW of liquid cooling since 2020, partnering with leading semiconductor firms to scale the technology.
This move follows nVent’s recently increased output at its Anoka, Minnesota site. The two facilities together are estimated to add more than 325 jobs.
Sara Zawoyski, President of nVent Systems Protection, mentioned:
“We play a key role in building out AI infrastructure with our innovative liquid cooling solutions, and our investments in innovation and expanding production capacity with this new facility underscores that.”
nVent Electric plc (NYSE:NVT) manufactures and distributes electrical connection and protection products worldwide through two main segments, Enclosures and Electrical & Fastening Solutions.
4. Ciena Corporation (NYSE:CIEN)
Number of Hedge Fund Holders: 57
Ciena Corporation (NYSE:CIEN) is one of the best smart city stocks. On September 26, Stifel kept its Buy rating and $152 price target on Ciena, whose shares are trading near a 52-week high and indicate a jump of roughly 120% in the last year.
Ciena is expected to maintain robust revenue growth with improved profitability metrics, according to Stifel, especially when keeping in mind the company’s almost 13% growth in the last year.
The research firm mentioned Ciena’s comments on bandwidth growth driven by AI workloads, highlighting that cloud companies are now pioneering new data transmission and interconnect technologies.
Analysts highlighted that while the company conventionally focused on telecom service provider needs, cloud service providers are increasingly taking charge in shaping technology development.
Stifel estimates that Ciena’s innovative capabilities, paired with ongoing demand and the mounting significance of optical technologies, will support projections and encourage higher stock multiples.
Ciena Corporation (NYSE:CIEN) provides networking hardware, software, and services to operators worldwide. Its operations include optical transport and IP routing, network management, multi-domain orchestration, analytics, and consulting.
3. QUALCOMM Incorporated (NASDAQ:QCOM)
Number of Hedge Fund Holders: 76
QUALCOMM Incorporated (NASDAQ:QCOM) is one of the best smart city stocks. On September 8, Qualcomm and Google Cloud (GOOG, GOOGL) expanded their collaboration to implement AI in automotive solutions. By combining Google Cloud’s Automotive AI Agent with Qualcomm’s Snapdragon Digital Chassis, the partnership’s goal is to allow automakers to develop AI-based car experiences.
Automakers can now integrate AI agents to control navigation, entertainment, and car functions via verbal commands, using Google’s Gemini models operating on both vehicle hardware and cloud infrastructure.
According to both companies, the integrated system aims to accelerate vehicle development by offering ready-made capabilities and a reference framework, while supporting multilingual input and simultaneous processing of different input types.
Shiv Venkataraman from Google Cloud mentioned that AI will change how car manufacturers provide experiences in and around vehicles, making them smarter, more personal, and more useful for drivers and passengers. Similarly, Nakul Duggal from Qualcomm added that the partnership is a crucial milestone that will enable automakers to build advanced and personalized digital experiences for their customers.
Although QCOM and Google have partnered previously, the new collaboration comes as auto manufacturers look to stand out with better digital features and AI capabilities.
2. Palantir Technologies Inc. (NASDAQ:PLTR)
Number of Hedge Fund Holders: 78
Palantir Technologies Inc. (NASDAQ:PLTR) is one of the best smart city stocks. On September 10, Palantir partnered with Hadean, a UK defense technology firm, to introduce battlefield simulation and command software for the British military through PLTR’s Foundry platform.
In November 2024, Hadean finalized a £20 million Enterprise Agreement Lite with the UK Ministry of Defence to supply AI-based digital wargaming and command software. The tools enable military officers to rehearse and strategize war operations, with AI creating scenarios and virtual agents for advanced training.
Through this partnership, Hadean’s offerings will integrate with the Ministry of Defence’s current data infrastructure using Palantir’s Foundry software. The companies mentioned that the products are set to be utilized in classified military settings in a few months.
The platform by Hadean has two main components: populAI for wargaming that imitates human actions and dynamic scenarios, and dominAI for command software that combines data streams to provide situational knowledge and decision support in real time.
Polly Scully from Palantir added that this partnership helps UK tech firms by providing them access to safe software made for sensitive operations. The move also strengthens Palantir’s current work with the UK Ministry of Defence.
1. Uber Technologies, Inc. (NYSE:UBER)
Number of Hedge Fund Holders: 152
Uber Technologies, Inc. (NYSE:UBER) is one of the best smart city stocks. On September 17, a new partnership took place between Uber and Designer Brands Inc. (NYSE:DBI).
Through Uber Eats, customers can order DSW footwear, accessories, and seasonal items for either on-demand or planned delivery. The offering includes popular brands such as Steve Madden, Adidas, Blundstone, and Goodr for all age groups. Some orders can also be delivered within one hour, giving customers access to nearly 500 stores across the United States.
Members of Uber One can get $0 delivery on eligible purchases. This initiative extends Uber Eats’ retail offerings beyond household, fashion, beauty, and personal care categories. Customers can also track orders in real-time through the Uber Eats app.
While we acknowledge the potential of UBER to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than UBER and that has 100x upside potential, check out our report about this cheapest AI stock.
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