Enterprise IoT spending growth has hit a multi-year low, but could be set for a resurgence, according to IoT Analytic’s State of IoT Spring 2025 report.

Enterprise IoT spending grew 10% in 2024, according to the analysis, the lowest market growth rate the firm observed since covering the market in 2014.

This slowdown comes on the back of macroeconomic uncertainties that led to reduced corporate investments in 2024, especially in the manufacturing sector, and in Europe.

“[We] began to see increasing weakness in the Industrial and IoT market already during quarter three, as well as an unexpected contraction in manufacturing PMI below 50 across all regions except China,” Kurt Sievers, CEO of NXP Semiconductors said at a Q3 2024 earnings call, exemplifying the tough conditions on key supply chain flows in the IoT market.

Hardware segments, including industrial automation and specific semiconductor subsegments) were the hardest hit, particularly the controllers and gateways segment, which saw an 8% decline in spending in 2024.

Despite these struggles, IoT software and connectivity services maintained strong growth.

Infrastructure-as-a-service (IaaS) and software-as-a-service (SaaS) supporting IoT deployments remained resilient, experiencing a 22% and 21% year on year growth in enterprise spending, respectively.

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In terms of investments, the top 20 IoT-related startup investments in the latter half of 2024, 45% of the investments were related to software. Meanwhile, IoT services related to wireless connectivity experienced slightly faster YoY growth, from 17.3% in 2023 to 17.7% in 2024.

The report does have some good news for the future, as enterprise Io market growth is set to accelerate in 2025. Starting this year, the enterprise IoT market growth is forecasted to re-accelerate, growing at 14% CAGR through 2030.

Hardware is also poised to see accelerated growth, the analytics firm predicts, with controllers and gateways forecasted to recover to a modest 4.5% CAGR through 2030. However, specific hardware and semiconductor segments – those at the intersection of IoT and AI – are expected to see a much larger growth rate.

“We anticipate QCT IoT revenues to increase by more than 20% on a year-over-year basis with growth across consumer, industrial and networking,” Qualcomm CEO Cristiano Amon said in a Q4 2024 earnings call.