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

Xiaomi is poised to become a primary beneficiary of China's expanding market for AI-powered home appliances, according to analysts at Morgan Stanley. The investment bank reiterated its Overweight rating and HK$45 price target on the company, highlighting its leadership in smart home technology and its comprehensive AI ecosystem as key drivers for long-term growth.

Analyst Outlook

Morgan Stanley projects significant expansion in China's AI home appliance sector, forecasting market growth from approximately $123 billion today to about $150 billion by 2030. The growth is expected to be driven by increased consumer adoption of connected devices and higher average selling prices.

Within this expanding market, the bank sees a substantial opportunity for Xiaomi. Analysts forecast the company's domestic AI home appliance revenue could surpass RMB 200 billion by 2035, with the potential for its overseas revenue to be even greater.

The Ecosystem Advantage

Central to Morgan Stanley's bullish thesis is Xiaomi’s integrated “Human + Car + Home” strategy, unified by its HyperOS platform. This ecosystem, which connects smartphones, wearables, televisions, appliances, and electric vehicles, gives the company a significant competitive advantage over traditional appliance manufacturers.

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The report notes that Xiaomi's growing global user base, with over one billion connected devices, provides a vast network for cross-selling products and deepening customer engagement. This integrated experience is expected to create powerful synergies across its product lines.

Beyond Hardware

Analysts believe the market currently underestimates 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 software could become a more significant driver of its valuation as earnings growth accelerates through 2027 and 2028.

These AI capabilities are expected to support product differentiation, premium pricing, and improved profitability. While acknowledging near-term concerns about rising memory chip costs, the report views these as manageable. Morgan Stanley noted that Xiaomi's management has already outlined countermeasures, including price adjustments and an improved product mix, with cost pressures anticipated to ease in the second half of 2026.