Would you recommend The Time Machine by H. G. Wells to students?
Whether I would recommend The Time Machine by H. G. Wells to students or assign it as required or recommended reading depends entirely on the course I am teaching and the reasons the student is asking for a recommendation.
The Time Machine is a dystopian novel about the future; it critiques current society by a sort of reductio ad absurdum, arguing that the society of the writer's day is on the wrong course by showing how extrapolation from the trends of his period would lead to a horrible future. Thus, it argues for how income inequality combined with assortative mating can lead to not only class divisions but to a change in the nature of the human race.
I would put it on a reading list for a course specializing in futuristic dystopias which might also include 1984, When The Sleeper Wakes, Erehwon, Fahrenheit 451, A Clockwork Orange, and The Handmaid's Tale. It might also fit within a course on the Victorian novel, but I would be more likely to assign The Island of Doctor Moreau, as its engagement with evolutionary theory makes it more useful as a way of examining the major intellectual trends of the period.
For recommending it to an individual student, I would recommend this and other works by either Wells or Verne to science or engineering majors taking courses on Victorian literature or even introductory literature courses as a way of showing how they can enjoy literary works that are relevant to their major interests.