Xiaomi Tapped as AI Home Appliance Leader by Morgan Stanley

Morgan Stanley analysts have identified Xiaomi as a key potential winner in China’s growing market for AI-powered home appliances, reiterating an Overweight rating and a HK$45 price target on the company's stock. The brokerage cited Xiaomi's integrated ecosystem and leadership in the smart home sector as foundational to its long-term growth potential.

Integrated Ecosystem Drives Growth

At the core of the bullish outlook is Xiaomi's comprehensive portfolio of interconnected devices. According to the Morgan Stanley report, the company's "Human + Car + Home" strategy, unified by its HyperOS platform, creates powerful synergies across smartphones, wearables, televisions, appliances, and electric vehicles.

This ecosystem is well-positioned to capitalize on a market that analysts expect to grow from approximately $123 billion today to about $150 billion by 2030. The report forecasts that Xiaomi’s domestic AI home appliance revenue alone could surpass RMB 200 billion by 2035, with international sales potentially exceeding that figure.

Undervalued AI Investments

Morgan Stanley noted that the market may be underestimating the value of Xiaomi's investments in artificial intelligence. The company's ongoing development of proprietary large language models, AI agents, and software could become a more significant driver of its valuation as earnings are projected to accelerate through 2027 and 2028.

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These AI capabilities are expected to support product differentiation, enable premium pricing, and improve overall profitability. The company's large and growing user base, with over one billion connected devices, provides a significant advantage for cross-selling products and deepening customer engagement.

Near-Term Outlook

While acknowledging near-term concerns over rising memory chip costs, the report viewed these pressures as manageable. Analysts pointed to management's plans to mitigate the impact through price adjustments and improvements in the product mix, with cost pressures expected to ease in the second half of the year.

International expansion was also highlighted as another key avenue for long-term revenue growth, complementing the company's strong position in its domestic market.