Xiaomi Tipped as Major Beneficiary in AI Home Appliance Market, Morgan Stanley Reports

Xiaomi is set to become one of the primary beneficiaries of China’s expanding market for AI-powered home appliances, according to analysts at Morgan Stanley. The investment bank reiterated its Overweight rating and HK$45 price target on the company, highlighting its integrated product ecosystem and significant long-term growth prospects.

A Bullish Outlook

The brokerage forecasts that China’s AI home appliance market will grow from approximately $123 billion today to around $150 billion by 2030, according to the report. This expansion is expected to be driven by increased consumer adoption of connected devices and higher average selling prices.

Morgan Stanley projects that Xiaomi’s domestic AI home appliance revenue could surpass RMB 200 billion by 2035. The bank also noted that the company's overseas revenue in the segment could potentially exceed that figure, pointing to international expansion as a key avenue for long-term growth.

The Ecosystem Advantage

Central to Morgan Stanley's positive outlook is Xiaomi’s comprehensive and integrated ecosystem. The company’s portfolio—spanning smartphones, wearables, televisions, and electric vehicles—is unified under its HyperOS platform. Analysts believe this "Human + Car + Home" strategy positions Xiaomi to capitalize on the trend of interconnected AI devices.

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This unified system creates a seamless user experience that can encourage cross-selling and deepen customer engagement. The report also cites Xiaomi's vast global user base, with over one billion connected devices, as a key competitive advantage against traditional appliance manufacturers.

Beyond Hardware

Morgan Stanley suggests the market currently underestimates the long-term value of Xiaomi’s investments in artificial intelligence. The company's development of proprietary large language models and AI agents is expected to become a more significant driver of its valuation as earnings growth accelerates through 2027 and 2028.

The report also addressed near-term investor concerns, viewing rising memory chip costs as a manageable issue. According to the note, Xiaomi management has outlined strategies, including price adjustments and product mix optimization, to mitigate these cost pressures, which are expected to ease in the second half of 2026.