AI TRENDS | Morgan Stanley Cuts Xiaomi Target Price to HK$32, Keeps Overweight Rating

Morgan Stanley cut its target price for Xiaomi Group (01810.HK) by 29% to HK$32 from HK$45, while maintaining an overweight rating. According to Jin10, the bank said the cut reflected lower forecasts for electric-vehicle deliveries that reduced its estimate of the EV business’s intrinsic value, as well as concerns that weaker smartphone sales could slow growth in monthly active users and lower its estimate of the intrinsic value of internet services. Morgan Stanley estimated Xiaomi’s EV deliveries in the second quarter of 2026 at about 100,000 units and about 180,000 units in the first half, which it said would represent 33% of the company’s full-year target. Even after factoring in new product launches in the second half, Morgan Stanley said Xiaomi was still unlikely to meet its full-year delivery target of 550,000 units. It lowered its forecast for Xiaomi’s EV deliveries this year to 500,000 units from 580,000 units, and cut its 2027 forecast to 700,000 units from 750,000 units. Separately, Morgan Stanley said the market was completely ignoring the intrinsic value of Xiaomi’s AI investments, which it conservatively estimated at 32 billion yuan. It added that if the company resumes profit growth, it believed Xiaomi’s AI valuation would rise sharply from current levels.