Goldman Sachs raises Xiaomi's target price, optimistic that Xiaomi will ultimately be an AI winner

In the current wave of AI and the Internet of Things (IoT) sweeping the globe, Xiaomi is quietly rewriting the competitive landscape of the technology industry with its unique strategic layout and strong ecological advantages.

Goldman Sachs released a research report earlier this week stating that Xiaomi's strategic layout in the AI and IoT fields, through the construction of an operating system-level AI agent—Xiao Ai and the world's largest AIoT ecosystem, is expected to achieve strong growth in the coming years and become the ultimate winner in the AI industry.

Xiaomi is in a favorable position to enhance its AI capabilities more efficiently, expand its "human × vehicle × home" ecosystem through AI, drive sales growth, and is expected to move upstream into the internet/software services sector in the long term by building an operating system-level AI agent—Xiao Ai and the world's largest AIoT ecosystem.

Goldman Sachs significantly raised Xiaomi's 12-month target price from HKD 38 to HKD 58, which is more than 12% higher than Friday's closing price, and reiterated its "buy" rating.

AI + AIoT Ecosystem

The report points out that Xiaomi is building an operating system-level AI agent—Xiao Ai—and is creating the world's largest AIoT ecosystem. The core of this strategy is to deeply integrate AI technology into Xiaomi's hardware, software, and services, achieving comprehensive intelligent connectivity from smartphones to smart homes and electric vehicles.

As of 2024, the number of Xiaomi's AIoT device connections is approaching 900 million, and this vast ecosystem provides ample space for Xiaomi's applications in the AI field.

Goldman Sachs also believes that the gap in AI large language model capabilities among companies is gradually narrowing, and Xiaomi's differentiated advantages are reflected in two aspects:

First, low customer acquisition costs; Xiaomi holds the third-largest global smartphone market share (13% in 2023), which means its AI technology can be rapidly implemented and promoted through a massive number of devices.

Second, Xiaomi's AI technology is not limited to the software level but achieves a more efficient intelligent experience through the deep integration of hardware and software. For example, Xiaomi's smart car SU7 Ultra and the soon-to-be-released YU7 not only match luxury brands in performance but also demonstrate strong competitiveness in intelligent configurations.

Significant Room for Imagination in Performance

Goldman Sachs holds an optimistic view of Xiaomi's financial prospects. The report predicts that Xiaomi's revenue compound annual growth rate (CAGR) from 2024 to 2027 will reach 26%, with net profit CAGR as high as 35%, making this growth rate one of the highest among Asian tech giants. Goldman Sachs also specifically mentioned that Xiaomi has enormous growth potential in the AIoT and automotive sectors, with expected revenue CAGRs of 17% and 99% respectively in these two fields from 2024 to 2027.

In terms of smartphone business, Xiaomi's global market share is expected to reach 13% in the fourth quarter of 2024, showing a slight increase compared to the same period last year. Meanwhile, Xiaomi's smartphone sales in the Chinese market achieved over 40% year-on-year growth in January 2025, demonstrating its strong competitiveness in the domestic marketGoldman Sachs believes that with Xiaomi's continued investment in AI technology, its smartphone business is expected to further consolidate market share through enhanced intelligent features.

In terms of electric vehicle business, Goldman Sachs forecasts that Xiaomi's smart electric vehicle deliveries will reach 360,000 units by 2025, exceeding the management's previous target of 300,000 units. Among them, the delivery volume of the high-end model SU7 Ultra is expected to reach 10,000 units, with a price estimated at 750,000 RMB, and a gross margin that will be five times that of ordinary models.

Goldman Sachs also pointed out that there are several things to watch in the coming months:

• The new product launch event at the end of February, where the SU7 Ultra, Xiaomi 15 Ultra, and other AIoT products (such as centralized air conditioning) will be unveiled, followed by the global launch of the Xiaomi 15 Ultra on March 2; we will pay attention to official pricing, order volume, and any announced value-added services;
• The SU7 Ultra will be tested at the Nürburgring track in March;
• Progress on the electric vehicle factory, including the expansion of Phase I factory, construction of Phase II factory, and updates on the second electric vehicle factory;
• The YU7 will be launched between June and July