Xiaomi Poised to Dominate AI Home Appliance Market, Morgan Stanley Says

Xiaomi is strategically positioned to become a leading beneficiary of the expanding AI-powered home appliance market in China, according to a recent analyst report from Morgan Stanley. The investment bank reiterated its Overweight rating on the company's stock and maintained its HK$45 price target, citing Xiaomi's comprehensive product ecosystem and significant long-term growth potential.

A Growing Market and Integrated Ecosystem

Morgan Stanley forecasts that China’s market for AI-enabled home appliances will grow from approximately $123 billion today to around $150 billion by 2030. Analysts project Xiaomi’s domestic revenue from this segment could surpass RMB200 billion by 2035, with international sales potentially exceeding that figure.

The core of the bullish outlook is Xiaomi's tightly integrated ecosystem of devices, which includes smartphones, wearables, televisions, appliances, and now electric vehicles. This network is unified by the company's HyperOS platform, which analysts believe is a key competitive advantage that allows for a seamless user experience and creates cross-selling opportunities.

Untapped Potential in AI and Global Reach

The report highlights that the market may be underestimating the long-term value of Xiaomi's investments in artificial intelligence. The company's ongoing development of proprietary large language models (LLMs), AI agents, and other software could become a significant valuation driver as earnings growth is expected to accelerate through 2027 and 2028.

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Several factors support this long-term view:

• Massive User Base: Xiaomi already has more than one billion connected devices in its network, providing a large and engaged customer base.
• Strategic Vision: The company's "Human + Car + Home" strategy is expected to create powerful synergies across its product lines, strengthening its market position against traditional appliance manufacturers.
• International Expansion: Global markets represent another key avenue for sustained revenue growth.

Near-Term Headwinds Viewed as Manageable

Morgan Stanley acknowledged near-term investor concerns regarding rising memory chip costs but described them as manageable. According to the report, Xiaomi's management has already outlined measures to mitigate these cost pressures, including targeted price increases and adjustments to its product mix. The analysts expect these cost pressures to ease in the second half of 2026.