Samsara Inc. (NYSE:IOT) sells software and sensors that help businesses track their vehicles, equipment, and workers in real time. At about $25 billion, Samsara is part of our compilation of 9 New Contenders for the S&P 500 Index. The company strung together a fourth consecutive profitable quarter under standard accounting rules, making it eligible for the illustrious list. The valuation, though, is demanding. Samsara trades around 13 times sales, and because its reported profit is still thin, its trailing price-to-earnings ratio is distorted into the hundreds, well above 250, while its forward multiple sits near 52 on next year’s expected earnings. Second-quarter revenue of $508 million grew about 30%.
Bull Case
The bull case is consistency in profit and the growth behind it. Management raised guidance, the run of consecutive GAAP-positive quarters satisfies the index rule freshly, and Cantor Fitzgerald recently began coverage at Overweight. Samsara’s sensors and software get bolted into a customer’s fleet and operations, which makes the revenue recurring. The company also keeps adding new uses, from safety cameras to equipment monitoring, that deepen each account over time. With eligibility arriving as the results roll in, Samsara is qualifying in real time, and the 30% growth rate is among the fastest on this list. Over the past six months, the stock posted a 37.5% gain. During the same period, the Insider Monkey Billionaire Index gained 11.6%.
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Bear Case
The bear case is size and valuation. With a market cap of $24.8 billion, Samsara sits close to the index’s market-value threshold. Therefore, a noticeable drawdown could pull it back below the bar before a seat opens. And at 13 times sales, with a near 52 forward earnings multiple and a trailing figure in the hundreds, the profit cushion is thin. The stock cannot afford even a stumble. A single quarter that breaks the profit streak would both dent the eligibility case and likely hit the stock hard, so the margin for error is slim on both counts.
Bottom line
The bottom line is that Samsara’s eligibility is lengthening with each profitable quarter, which sets it apart from the unprofitable names on this list. The open questions are whether it stays comfortably above the size threshold and whether the premium valuation holds up if growth cools even slightly. Whether that trade-off between fresh eligibility and a steep price suits you is your call.
Market Sentiment
On positioning, interest eased even as the fundamentals qualified, with Insider Monkey’s database showing 40 hedge funds holding ownership stakes in Samsara Inc. at the end of the second quarter of 2026, down from 45 the quarter prior, reflecting confidence among the big-time investors during the first half of 2026.
To see where IOT ranks alongside the rest of the pool featured in 9 New Contenders for the S&P 500 Index, click HERE.
Fewer hedge funds held IOT last quarter, yet software was the story of Q3, according to Jim Cramer.
While we acknowledge the risk and potential of IOT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than IOT and that has 10,000% upside potential, check out our report about this cheapest AI stock.
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This article is originally published at Insider Monkey.
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