Top 10 Smart Cities Investment Opportunities in 2026

Executive Summary

LONDON, February 21, 2026 — The global smart cities market is accelerating toward a projected $3.76 trillion by 2030 according to Grand View Research, with some estimates from Research and Markets reaching as high as $5.2 trillion. This comprehensive analysis identifies the 10 most compelling smart city investment opportunities for 2026, ranking them by total addressable market size and examining the companies, technologies, and infrastructure platforms reshaping urban life. From AI-powered traffic enforcement and virtual power plants to cloud-based physical security and autonomous vehicle corridors, these investment categories span both public equities and high-growth private companies backed by institutional investors including Alphabet, Sequoia Capital, Andreessen Horowitz, and TPG's The Rise Fund. With over 4,900 funding rounds completed across the smart city ecosystem and 3,300+ active investors deploying capital, the sector offers diversified entry points for investors at every stage.

As we highlighted in our analysis of ESG startups, the convergence of sustainability mandates with technological innovation is creating outsized investment opportunities. Smart cities sit at the epicentre of this convergence: the US Infrastructure Investment and Jobs Act has allocated $65 billion for smart grid and EV charging infrastructure, the EU's Green Recovery Funds total €750 billion for digital transformation, and China has invested $1.4 trillion in its Smart City Program since 2012. These government commitments provide a demand floor that de-risks private sector investment in the technologies and platforms that enable intelligent urbanisation.

Key Takeaways

• Global smart cities market projected to reach $3.76-$5.2 trillion by 2030, with 20.3% CAGR driven by IoT, AI, 5G, and climate mandates
• Top 10 investment opportunities span $167 billion (smart mobility) to $300+ billion (smart energy) addressable markets across infrastructure, security, waste, water, and connectivity
• Verkada ($700M raised, $5.8B valuation) and Hayden AI ($193M raised) represent the highest-growth private companies in smart building security and transit enforcement respectively
• Sidewalk Infrastructure Partners has raised $850M to invest in technology-enabled urban infrastructure, with portfolio companies including Renew Home (3 GW virtual power plant), Cavnue (autonomous vehicle corridors), and AMP Robotics (AI waste sorting)
• Public market leaders Samsara (NYSE: IOT, $1.25B FY2025 revenue), Itron (NASDAQ: ITRI, $2.4B revenue), and Qualcomm (NASDAQ: QCOM) provide liquid exposure to smart city infrastructure themes
• Government investment totalling $65B (US), €750B (EU), and $1.4T (China) creates a multi-decade demand floor for smart city technologies

Top 10 Smart Cities Investment Opportunities Ranked by Market Size

Top 10 Smart City Investment Opportunities in 2026 — Ranked by Addressable Market

Rank	Investment Category	Addressable Market	Leading Company	Investment Type	Key Metric
1	Smart Energy & Virtual Power Plants	$300B+ (2025)	Renew Home / Sidewalk Infra	Private (SIP portfolio)	3 GW under management
2	Smart Utility IoT Infrastructure	$2.4B revenue (Itron alone)	Itron (NASDAQ: ITRI)	Public equity	$4.3B backlog
3	Smart Mobility & Transit Tech	$250.56B by 2030	Hayden AI	Private (Series C)	$193M raised
4	Autonomous Vehicle Infrastructure	$130M+ deployed	Cavnue (SIP platform)	Private (SIP portfolio)	40-mile I-94 corridor
5	5G & Connected Infrastructure	$16-43.5B (2025)	Qualcomm (NASDAQ: QCOM)	Public equity	$10.84B quarterly revenue
6	Smart Building Security	$5.8B valuation	Verkada	Private (Series E)	$700M raised, 30K customers
7	Connected Fleet Operations	$1.25B FY2025 revenue	Samsara (NYSE: IOT)	Public equity	$1.64B ARR
8	Smart Building Management	155% 3-year ROI	Johnson Controls (NYSE: JCI)	Public equity	OpenBlue platform leader
9	AI-Powered Waste & Recycling	$2.1T global waste market	AMP Robotics	Private (Series D)	400+ robots, 150B items sorted
10	Smart City Infrastructure Fund	$850M AUM	Sidewalk Infrastructure Partners	Private fund	8 portfolio companies

1. Smart Energy and Virtual Power Plants — $300 Billion+ Market

The smart energy sector represents the largest single investment opportunity within the smart cities ecosystem, with MarketsandMarkets estimating the market at $300 billion in 2025. The category's standout company is Renew Home, formed in December 2023 through the merger of Google Nest Renew and OhmConnect, backed by $100 million from Sidewalk Infrastructure Partners. Renew Home operates North America's largest residential virtual power plant (VPP), managing 3 GW of electrical energy across 5+ million enrolled households and partnering with 100+ utilities across the United States.

The company's technology aggregates distributed energy resources — smart thermostats, HVAC systems, water heaters, and increasingly home batteries and electric vehicles — to automatically shift energy usage to off-peak periods when electricity is cheaper, cleaner, and less grid-constrained. In 2024, Renew Home announced a landmark partnership with NRG Energy and Google Cloud to build a 1 GW AI-powered VPP in Texas, equivalent to the capacity needed by 200,000 homes during peak demand. Free smart thermostat installations (Vivint/Nest) for eligible customers began rolling out in spring 2025. The company has set a target of 50 GW under management by 2030, representing approximately 25% of the US Department of Energy's projected VPP growth — an ambitious trajectory that, if achieved, would make Renew Home a critical component of America's grid modernisation infrastructure.

For investors, the smart energy opportunity extends beyond Renew Home. The US Infrastructure Investment and Jobs Act has allocated $65 billion specifically for smart grid and EV charging infrastructure, creating a multi-decade demand cycle for energy management technologies. As noted in Forbes, the integration of renewable energy sources with AI-driven demand response represents one of the most significant infrastructure transitions since rural electrification.

2. Smart Utility IoT Infrastructure — $2.4 Billion Revenue Leader

Itron (NASDAQ: ITRI), founded in 1977 and headquartered in Liberty Lake, Washington, is the pure-play public market leader in smart utility and smart city IoT infrastructure, generating $2.4 billion in revenue in 2024 with 12% year-over-year growth. The company provides advanced metering infrastructure (AMI), IoT-enabled sensors, network platforms, and analytics software for electricity, gas, and water utilities globally, serving 70+ city governments and major utilities including Con Edison and Tampa Electric.

Itron's investment case centres on its $4.3 billion backlog and expanding gross margins, which reached a record 37.7% in Q3 2025 as the company transitions from hardware-centric revenue to higher-margin software and services. The Outcomes segment — which provides cloud-based analytics, distributed energy resource management (DERM), and grid edge intelligence — grew 25% in Q4 2024 and 14% in Q1 2025, demonstrating the company's successful pivot toward recurring revenue streams. Itron's OpenWay Riva IoT platform supports RF mesh, cellular/NB-IoT, and LoRaWAN networks, providing the foundational connectivity layer that smart city applications require.

For smart city investors seeking liquid public market exposure, Itron offers a rare combination of established revenue at scale, margin expansion, and secular growth tailwinds from grid modernisation, renewable energy integration, and ageing infrastructure replacement. The company estimated that 82% of utilities are adopting IoT and AI for safety and predictive maintenance, indicating significant runway for continued growth in its core markets.

3. Smart Mobility and Transit Technology — $250 Billion by 2030

The smart mobility market is projected to grow from $167 billion in 2025 to $250.56 billion by 2030 at an 8.45% CAGR, according to Grand View Research. The highest-conviction private investment opportunity in this category is Hayden AI, a San Francisco-based company that has raised $193 million across 9 funding rounds, including a $90-95 million Series C led by TPG's The Rise Fund in July 2024. Hayden AI develops AI-powered vision systems mounted on transit vehicles that automatically detect and enforce bus lane, bike lane, and traffic violations — effectively transforming every city bus into a mobile enforcement platform.

Hayden AI's technology has been deployed in 15+ US cities including partnerships with LA DOT and New York City, addressing a problem that costs urban transit systems billions of dollars annually in lost ridership and delayed services. The company was named to the GovTech 100 list for five consecutive years and recognised as a TIME Magazine Top GreenTech Company in 2024. With ISO/IEC 27001 certification achieved in November 2025, Hayden AI has addressed the data security concerns that often slow government procurement of AI-powered surveillance technologies.

Additional investors in the company include Autotech Ventures, Mitsubishi Electric, Global Brain, and the London Technology Club, reflecting international institutional confidence in the US municipal technology market. As cities worldwide grapple with congestion, emissions, and transit reliability, automated enforcement platforms like Hayden AI's represent a category of smart city investment with immediate, measurable returns for municipal clients — reduced violations, improved bus speeds, and increased fare revenue.

4. Autonomous Vehicle Infrastructure — First-of-its-Kind Smart Corridors

Cavnue, a platform company of Sidewalk Infrastructure Partners, is building America's first dedicated smart road for connected and autonomous vehicles (CAVs) along a 40-mile corridor on Interstate 94 between Detroit and Ann Arbor, Michigan. The company raised $130 million in Series A funding in April 2022, led by Ford and Sidewalk Infrastructure Partners, to develop sensor-equipped, digitally connected road infrastructure that communicates in real-time with autonomous and human-driven vehicles about hazards including debris, stalled cars, and work zones.

A 3-mile pilot lane on I-94 opened in July 2024 for a two-year testing period, with commercial framework agreements reached with Michigan DOT for phased CAV deployment in the I-94 median through 2025-2026. Cavnue's industry advisory board includes Ford, GM, BMW, Honda, Toyota, Waymo, and the University of Michigan — a coalition representing the major automotive OEMs and autonomous vehicle developers whose technology will operate on these smart corridors. The company's "infrastructure-as-a-service" business model charges municipalities and operators for smart road usage, exploring federal transportation grants alongside private funding.

The investment thesis for autonomous vehicle infrastructure rests on a simple premise: self-driving vehicles need smart roads to achieve safety and reliability at scale. While significant capital has flowed into autonomous vehicle software and hardware, the road infrastructure enabling these vehicles to operate safely has received comparatively less investment attention, creating an opportunity for first-movers like Cavnue to establish dominant positions in a category that will grow alongside autonomous vehicle adoption.

5. 5G and Connected Infrastructure — $16-43.5 Billion Market

Qualcomm (NASDAQ: QCOM) is the foundational technology enabler for 5G-connected smart city infrastructure, providing the chipsets, modems, and radio frequency systems that power 5G networks globally. The company reported $10.84 billion in quarterly revenue for Q2 FY2025, with non-handset segments — automotive, IoT, and infrastructure — projected to contribute $22 billion annually by 2029. Qualcomm's X85 5G Modem-RF, launched in March 2025 with an integrated AI processor delivering 12.5 Gbps download speeds, represents the next generation of connectivity hardware for smart city sensor networks, autonomous vehicles, and real-time urban analytics platforms.

The global 5G infrastructure market is estimated at $16-43.5 billion in 2025, depending on the research methodology, with the deployment of ubiquitous 5G networks supporting the ultra-low latency required for advanced AI applications, augmented reality urban services, and vehicle-to-everything (V2X) communication. Qualcomm's partnerships with Viettel, NTT DOCOMO, ZTE, and China Unicom for large-scale Open RAN deployments position the company at the centre of the global 5G rollout. As Forbes noted, 5G connectivity is "the backbone of future smart cities, providing unprecedented levels of automation and insights."

For investors, Qualcomm offers liquid public market exposure to the 5G infrastructure buildout with an established dividend (3.09% yield) and a business model that captures value from every connected device in the smart city ecosystem — from traffic sensors and autonomous vehicles to environmental monitors and public safety cameras.

6. Smart Building Security — $700 Million Raised, $5.8 Billion Valuation

Verkada, founded in 2016 in San Mateo, California, has raised $700 million across 11 funding rounds and achieved a $5.8 billion valuation in December 2025 following a round led by CapitalG (Alphabet's growth fund). The company provides cloud-based physical security systems including video surveillance cameras, access control, environmental sensors, alarms, and intercoms — all managed through a unified AI-powered software platform. With 30,000+ customer organisations, 91 Fortune 500 companies, and 2 million+ devices deployed across 171 countries, Verkada has achieved remarkable commercial traction in the smart building security market.

Verkada's $200 million Series E in February 2025, led by General Catalyst, was followed by a $20 million extension in November 2025 from CapitalG and a $100 million round in December 2025 that pushed the valuation from $4.5 billion to $5.8 billion — a 29% increase in 10 months. The company's annual bookings exceeded $1 billion as of December 2025, with customer base growth of 111% and revenue growth of 95% since September 2022. Key investors include General Catalyst, Eclipse, Index Ventures, First Round Capital, and BDT & MSD Partners, as reported by CNBC.

The smart building security opportunity extends beyond traditional surveillance. Verkada's AI-powered analytics enable occupancy monitoring, people counting, threat detection, and environmental condition tracking — capabilities that transform security cameras from passive recording devices into active building management tools. For institutional investors, Verkada represents one of the few high-growth, pre-IPO opportunities in the smart building space with demonstrated product-market fit, rapid revenue scaling, and blue-chip investor backing.

7. Connected Fleet Operations — $1.64 Billion ARR

Samsara (NYSE: IOT), founded in 2015 by Sanjit Biswas and John Bicket, is the leading publicly traded platform for connected fleet and industrial operations, generating $1.25 billion in FY2025 revenue (33% year-over-year growth) with annual recurring revenue (ARR) reaching $1.64 billion (30% growth). The company raised $915 million in private funding before its December 2021 IPO at an $11.5 billion valuation, backed by Andreessen Horowitz, General Catalyst, General Atlantic, and Tiger Global.

Samsara's IoT platform provides fleet telematics, AI dash cameras, driver safety monitoring, EV fleet management, equipment tracking, and site visibility for organisations that operate physical assets in urban environments. The technology transforms city-scale fleet operations — from municipal garbage trucks and transit buses to delivery vehicles and construction equipment — into data-rich, AI-optimised systems that reduce accidents, lower fuel consumption, and improve operational efficiency. With sensors deployed across millions of vehicles and assets, Samsara generates the real-time operational data that smart city planners need to manage urban logistics effectively.

As a public company with strong revenue growth, expanding margins, and a dominant market position in connected operations, Samsara offers investors liquid exposure to the smart city fleet management theme without the illiquidity risk of private venture investments. The company's transition from fleet-specific telematics to a broader "Connected Operations Cloud" positions it to capture additional smart city use cases including construction site monitoring, warehouse operations, and municipal asset management. As we analysed in our coverage of AI infrastructure investments, platforms that generate proprietary operational data at scale command premium market valuations.

8. Smart Building Management — 155% Three-Year ROI

Johnson Controls (NYSE: JCI), with over 135 years of building technology expertise, has positioned its OpenBlue digital platform as the industry leader in AI-driven smart building management. A Forrester Total Economic Impact study published in April 2025 found that OpenBlue delivers up to 155% return on investment over three years, with energy cost savings of up to 10% and rental premiums of 7-8% for smart building certifications. The company reported 7% organic sales growth in Q2 2025, net income of $478 million, and EBITDA margins of 15.7%, with the OpenBlue platform driving robust demand across its service offerings.

OpenBlue integrates HVAC optimisation, security, fire safety, and energy management into a single AI-powered platform that serves healthcare facilities, schools, data centres, airports, and stadiums globally. Named the overall leader in Smart Building Management Platforms by ABI Research, Johnson Controls launched generative AI capabilities within OpenBlue in November 2024, enabling building operators to interact with their building systems through natural language queries. The platform funds customer projects totalling $6+ billion worldwide, demonstrating the scale of capital deployment flowing through smart building modernisation programmes.

For investors, Johnson Controls offers stable, dividend-paying exposure to the smart building management trend through a company that combines century-old domain expertise in HVAC and fire safety with cutting-edge AI and IoT capabilities. The 155% three-year ROI demonstrated by the Forrester study provides a compelling value proposition for building owners, suggesting that OpenBlue adoption will accelerate as property managers seek to meet ESG mandates, reduce operating costs, and command premium rents in competitive commercial real estate markets.

9. AI-Powered Waste Management and Recycling — $2.1 Trillion Global Market

AMP Robotics, founded in Boulder, Colorado, has raised $91 million in Series D funding in December 2024 led by Congruent Ventures, with participation from Sequoia Capital, CalSTRS (California State Teachers' Retirement System), Wellington Management, and Liberty Mutual Investments. The company develops AI-powered vision systems and robotic arms that sort recyclable materials and municipal solid waste (MSW) at industrial scale, with its AI platform having identified 150 billion items and sorted 2.5 million+ tons of recyclables across 400+ deployed robots globally.

AMP's flagship AMP ONE facilities process 10,000 to 1 million+ tons of waste per year, achieving 90%+ material recovery rates at 30-50% lower cost than traditional sorting facilities. The company's Portsmouth, Virginia facility — the first of its kind to sort unsorted municipal waste using AI — processes 150 tons per day with 90%+ uptime. A second facility in Commerce City, Colorado, developed in partnership with Waste Connections, will open in 2026 with 62,000 tons per year capacity. Leadership transitioned in 2024 with Tim Stuart (former COO of Republic Services) becoming CEO and founder Matanya Horowitz moving to CTO, signalling the company's shift from R&D to scaled commercial operations, as reported by TechCrunch.

The global waste management market exceeds $2.1 trillion, and smart city waste management represents one of the most tangible, measurable applications of AI in urban infrastructure. AMP's technology enables municipalities to reduce landfill dependency by 60%, extend landfill life, and generate real-time waste composition data for policy decisions. For investors, AMP Robotics sits at the intersection of AI, robotics, and the circular economy — three powerful secular growth themes — with a business model (sortation-as-a-service, per-ton pricing) that generates recurring revenue from essential municipal services.

10. Smart City Infrastructure Fund — $850 Million Under Management

Sidewalk Infrastructure Partners (SIP), founded in 2018 as a spin-off from Alphabet's Sidewalk Labs, has raised $850 million in total funding — including a $200 million round in November 2025 with participation from Guinness Ventures — to invest in technology-enabled urban infrastructure. Backed by Alphabet, Ontario Teachers' Pension Plan, and StepStone Group, SIP operates as both an investment fund and a platform builder, creating and scaling companies that address critical infrastructure challenges across energy, mobility, connectivity, and the circular economy.

SIP's portfolio of 8 investments includes several companies profiled in this analysis — Renew Home (virtual power plants), Cavnue (autonomous vehicle corridors), and AMP Robotics (AI waste sorting) — alongside CoFi (5G network deployment software), Dense Air (wireless infrastructure), and Polysift (advanced materials recycling). The firm's approach differs fundamentally from traditional venture capital: rather than making passive minority investments, SIP actively builds and operates platform companies that require deep infrastructure expertise and long-duration capital. The December 2023 creation of Renew Home through the merger of Google Nest Renew and OhmConnect exemplifies this approach — SIP invested $100 million and orchestrated a complex corporate combination to create North America's largest residential virtual power plant.

For institutional investors seeking diversified exposure to smart city infrastructure, SIP represents a differentiated investment vehicle that combines Alphabet's technological capabilities with infrastructure-grade capital deployment. The firm's portfolio companies collectively address the foundational layers of smart city infrastructure — energy, transportation, connectivity, and waste — providing exposure to the full smart city technology stack through a single investment relationship.

Technologies Driving Smart City Investment in 2026

Five converging technological forces are accelerating smart city investment beyond historical growth rates. First, artificial intelligence has moved from experimental to operational in urban infrastructure, as demonstrated by Hayden AI's transit enforcement, AMP Robotics' waste sorting, Verkada's security analytics, and Renew Home's demand response optimisation. Second, 5G network deployment is providing the ultra-low latency connectivity required for real-time urban applications — from autonomous vehicle communication to sensor-driven traffic management. According to Grand View Research, the deployment of ubiquitous 5G networks is creating a "robust technological infrastructure for smart cities" that was not feasible with previous connectivity generations.

Third, IoT sensor costs have declined to the point where pervasive urban sensing is economically viable. Itron's OpenWay Riva platform, Samsara's fleet sensors, and Johnson Controls' environmental monitors collectively demonstrate that the cost-benefit equation for urban IoT has crossed the threshold for mainstream municipal adoption. Fourth, cloud computing and edge processing enable the real-time analytics that transform raw sensor data into actionable urban intelligence. Fifth, and perhaps most critically, climate mandates and ESG frameworks are converting smart city technologies from discretionary municipal expenditures into regulatory requirements, creating predictable, long-term demand cycles that improve investment risk-return profiles.

Smart Cities Market Statistics — Investment and Growth Forecasts

Smart Cities Market and Investment Statistics 2025-2030

Metric	Value	Year/Period	Source
Global Smart Cities Market (Conservative)	$3,757.9 billion	2030	Grand View Research
Global Smart Cities Market (High Estimate)	$5.2 trillion	2030	Research and Markets
Smart Cities Market Size (2025)	$949.94 billion	2025	Industry consensus
Market CAGR	20.3%	2025-2029	Industry estimates
Smart Transportation Market	$250.56 billion	2030	Grand View Research
Smart Energy Market	$300 billion	2025	MarketsandMarkets
5G Infrastructure Market	$16-43.5 billion	2025	Multiple sources
Smart Building Growth Rate	17%	2025	Grand View Research
US Infrastructure Act (Smart Grid + EV)	$65 billion	Enacted 2021	US Government
EU Green Recovery Funds	€750 billion	2021-2026	European Commission
China Smart City Program Investment	$1.4 trillion	Since 2012	Industry estimates
Smart City Startups Globally	1,800+	2025	StartUs Insights
Total Funding Rounds (Sector)	4,900+	Cumulative	Industry databases
Active Investors in Smart Cities	3,300+	2025	Industry databases

Why This Matters

Smart cities represent one of the largest capital deployment opportunities of the next decade, with addressable markets spanning multiple trillions of dollars across energy, transportation, buildings, security, waste management, and connectivity infrastructure. For investors, the sector offers an unusually diversified risk-return profile: public equities like Samsara, Itron, Qualcomm, and Johnson Controls provide liquid exposure with established revenue at scale, while private companies like Verkada, Hayden AI, and AMP Robotics offer higher-growth profiles with pre-IPO appreciation potential. Sidewalk Infrastructure Partners' fund model provides institutional investors with diversified exposure to the full smart city technology stack through a single relationship backed by Alphabet and Ontario Teachers' Pension Plan.

The convergence of government mandates (US $65B, EU €750B, China $1.4T), technological maturation (AI, 5G, IoT at commercial scale), and urbanisation pressures (68% of the world's population projected to live in cities by 2050) creates structural demand that is largely independent of economic cycles. As highlighted in our analysis of health tech trends, technologies that address fundamental infrastructure needs with measurable ROI attract sustained institutional capital even during periods of market volatility.

What Comes Next (12-36 Month Outlook)

Over the next 12 to 36 months, several developments will shape smart city investment returns. Verkada's potential IPO — suggested by its rapid valuation growth, $1 billion+ annual bookings, and blue-chip institutional backing — could provide the sector with its most prominent public listing since Samsara's 2021 debut. Cavnue's I-94 pilot results, expected to conclude in mid-2026, will provide critical data on whether dedicated autonomous vehicle infrastructure can achieve the safety and efficiency improvements necessary to justify scaled deployment across the US highway system.

Renew Home's Texas VPP partnership with NRG Energy will test whether AI-powered virtual power plants can deliver gigawatt-scale grid services reliably enough to substitute for traditional power plant construction — a proof point that could reshape utility capital allocation nationwide. AMP Robotics' expansion from three to potentially dozens of full-scale municipal waste sorting facilities will determine whether AI-powered recycling can achieve the economics required for widespread municipal adoption.

In public markets, investors should monitor Itron's continued margin expansion as it transitions toward software-centric revenue, Samsara's ARR growth trajectory as it expands beyond fleet management into broader connected operations, and Qualcomm's non-handset revenue contribution as 5G infrastructure deployment accelerates globally. It is important to note that all investment projections carry uncertainty and depend on market conditions, regulatory policies, technological developments, and execution risk. Past performance does not guarantee future returns, and smart city investments — particularly in private companies — involve significant illiquidity and loss risk.

Disclosure: Business 2.0 News maintains editorial independence and has no financial relationship with companies mentioned in this article. This analysis is for informational purposes only and does not constitute investment advice.

References

• Grand View Research — Smart Cities Market Forecast
• Research and Markets — Smart Cities Strategic Report
• MarketsandMarkets — Smart Cities Market Size
• Hayden AI — Series C Announcement
• CNBC — Verkada $5.8B Valuation
• Sidewalk Infrastructure Partners — Overview
• Renew Home — Virtual Power Plant Platform
• Cavnue — Michigan Smart Road
• TechCrunch — AMP Robotics Series D
• Forbes — Smart City Technologies
• StartUs Insights — Smart City Startups
• Johnson Controls — OpenBlue TEI Study