Xiaomi Tipped as AI Home Appliance Leader by Morgan Stanley

Xiaomi is poised to become a leading player in China’s artificial intelligence-powered home appliance sector, according to a new report from Morgan Stanley. The investment bank reiterated its Overweight rating and HK$45 price target on the company, citing its comprehensive AI ecosystem and significant long-term growth potential.

Analyst Outlook

Morgan Stanley projects that China’s AI home appliance market will expand from approximately $123 billion today to around $150 billion by 2030. This growth is expected to be fueled by wider adoption of connected devices and increasing average selling prices.

For Xiaomi specifically, the firm forecasts that domestic AI home appliance revenue could surpass RMB 200 billion by 2035, with international revenue potentially exceeding that figure. Analysts noted that the market may be underestimating the company's investments in proprietary AI, which could become a more significant valuation driver as earnings growth picks up in 2027 and 2028.

Xiaomi's Ecosystem Advantage

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The bullish outlook hinges on Xiaomi's integrated product strategy, which connects its diverse hardware portfolio through its HyperOS platform. Analysts highlighted several key competitive strengths:

• Integrated Portfolio: The company's "Human + Car + Home" strategy creates synergies between its smartphones, wearables, appliances, and electric vehicles, encouraging consumers to adopt multiple interconnected devices.
• Vast User Base: With over one billion connected devices, Xiaomi has a massive installed base that provides significant opportunities for cross-selling and deepening customer engagement.
• AI Development: Ongoing work on proprietary large language models and AI agents is expected to support product differentiation, premium pricing, and improved profitability.
• International Expansion: Global markets represent another key avenue for long-term revenue growth.

Market Context

Morgan Stanley addressed near-term investor concerns about rising memory chip costs, viewing them as manageable. The report stated that Xiaomi's management has already outlined countermeasures, including targeted price increases and adjustments to its product mix. Analysts expect these cost pressures to ease in the second half of 2026.