Xiaomi Positioned as a Key Winner in AI Home Appliances, Morgan Stanley Says

Xiaomi Corp. is poised to become a leading beneficiary of China's growing market for AI-powered home appliances, according to a new report from Morgan Stanley. The investment bank reiterated its Overweight rating and HK$45 price target on the technology company, highlighting its integrated product ecosystem and long-term growth potential.

Integrated Ecosystem Drives Advantage

Morgan Stanley's bullish outlook is centered on Xiaomi’s comprehensive "Human + Car + Home" strategy. Analysts at the firm note that the company's interconnected portfolio—spanning smartphones, wearables, televisions, appliances, and electric vehicles—creates a powerful, unified user experience through its HyperOS platform.

This ecosystem, with over one billion connected devices globally, provides a significant competitive advantage over traditional appliance manufacturers. According to the report, this vast user base facilitates cross-selling opportunities and deepens customer engagement, while international expansion presents another key avenue for long-term growth.

Market Growth and Financial Outlook

The brokerage projects significant expansion in the underlying market, forecasting that China’s AI home appliance sector will grow from approximately $123 billion today to around $150 billion by 2030. This growth is expected to be driven by increased consumer adoption of smart devices and higher average selling prices.

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For Xiaomi specifically, the bank projects:

• Domestic AI home appliance revenue could surpass RMB200 billion by 2035.
• Overseas revenue has the potential to exceed the domestic figure in the long term.

Underestimated AI and Cost Management

Morgan Stanley believes the market currently underestimates the value of Xiaomi's investments in artificial intelligence. The report suggests that the company's ongoing development of proprietary large language models (LLMs) and AI agents could become a more significant valuation driver as earnings growth accelerates through 2027 and 2028.

While acknowledging near-term concerns about rising memory chip costs, the analysts view the issue as manageable. The report states that Xiaomi's management has outlined plans to mitigate these pressures through price adjustments and product mix optimization, with cost headwinds expected to ease in the second half of 2026.