Xiaomi Tipped as AI Home Appliance Leader by Morgan Stanley

Xiaomi Corp. is well-positioned to emerge as a major winner in 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, citing its expansive and integrated ecosystem as a core driver for future growth.

The Ecosystem Advantage

Morgan Stanley's bullish thesis centers on Xiaomi's "Human + Car + Home" strategy, which seamlessly connects a diverse portfolio of products, including smartphones, wearables, televisions, appliances, and electric vehicles. This network is unified by the company's proprietary HyperOS platform, creating what analysts see as a key competitive advantage over traditional appliance manufacturers.

The report states this interconnected system allows Xiaomi to benefit as consumers increasingly adopt smart devices. It also creates significant opportunities to cross-sell products and deepen customer engagement by offering a single, integrated user experience.

Market Projections and Revenue Potential

The brokerage forecasts substantial growth for the sector, projecting that China’s AI home appliance market will expand from roughly $123 billion today to about $150 billion by 2030. This growth is expected to be driven by higher adoption of connected devices and rising average selling prices.

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For Xiaomi specifically, Morgan Stanley outlined a strong long-term revenue outlook:

• Domestic AI home appliance revenue could exceed RMB 200 billion by 2035.
• Overseas revenue has the potential to surpass that figure as the company continues its international expansion.

Underestimated AI and Near-Term Outlook

Beyond hardware, Morgan Stanley believes the market underestimates the value of Xiaomi's investments in artificial intelligence. The firm's ongoing development of proprietary large language models and AI agents could become a more meaningful valuation driver as earnings growth is expected to accelerate through 2027 and 2028.

These AI capabilities are seen as crucial for product differentiation, supporting premium pricing and enhancing profitability. The report also addressed near-term concerns over rising memory chip costs, viewing them as manageable through measures like price increases and product mix adjustments.