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

Xiaomi is poised to become a leading beneficiary of the expanding AI-powered home appliance market in China, according to a new report from Morgan Stanley. The investment bank reiterated its Overweight rating and HK$45 price target on the electronics giant, citing its comprehensive product ecosystem and significant investments in artificial intelligence.

Market Growth and Revenue Projections

Morgan Stanley analysts forecast that China's market for AI-enabled home appliances will grow from approximately $123 billion today to about $150 billion by 2030. This growth is expected to be driven by increased consumer adoption of connected devices and higher average selling prices.

Within this expanding market, the report projects significant upside for Xiaomi. Analysts estimate the company's domestic AI home appliance revenue could surpass RMB 200 billion by 2035, with the potential for its overseas revenue to grow even larger.

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 distinct advantage over traditional appliance manufacturers.

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The report highlights how this interconnected portfolio creates opportunities to increase customer spending and deepen engagement through a single, seamless user experience. With more than one billion connected devices already in its network, Xiaomi has a vast user base for cross-selling products and services.

AI Investments and Near-Term Outlook

Morgan Stanley believes the market currently underestimates the long-term value of Xiaomi's investments in AI. The development of proprietary large language models and AI agents is expected to support product differentiation, premium pricing, and improved profitability, becoming a more significant valuation driver in 2027 and 2028.

While acknowledging near-term concerns about rising memory chip costs, the report views these headwinds as manageable. Analysts noted that Xiaomi's management has outlined mitigation strategies, including price adjustments and product mix improvements, with cost pressures anticipated to ease in the second half of 2026.