Is Tuya’s (TUYA) AI Pivot and Rising Profitability Recasting Its Core Investment Narrative?

• In the past week, Tuya Inc. reported first-quarter 2026 results, with sales of US$80.88 million and net income of US$15.78 million, both higher than a year earlier, and basic and diluted EPS from continuing operations rising to US$0.03.
• Beyond the headline growth, Tuya highlighted AI as a main business driver, with new offerings like Hey Tuya and AI Security Guardian and a move toward higher-value PaaS and AI applications while phasing out lower-value hardware.
• We’ll now examine how Tuya’s stronger profitability and AI-driven product expansion may influence its existing investment narrative and risk profile.

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Tuya Investment Narrative Recap

To own Tuya, you need to believe its AI centric IoT platform can keep deepening relationships with brands and developers, turning more usage into higher margin software revenue. The latest results reinforce that profitability is improving in the near term, but they do not materially change the key near term catalyst, which is whether AI driven PaaS and applications can scale fast enough to offset pressure in legacy hardware, nor the biggest risk from intensifying global IoT and AI competition.

Among recent announcements, the April upgrade to Hey Tuya looks most connected to this earnings story, as it illustrates how Tuya is trying to move further into AI powered, cross ecosystem scenarios that could support its higher value PaaS and application ambitions. Integrations with services like Google productivity tools and support for standards such as Matter and Home Assistant may help Tuya stay relevant with developers, which ties directly into whether its AI focus can sustain the current profitability improvement.

Yet against that progress, investors should be aware of how rising competition in global IoT and AI platforms could...

Read the full narrative on Tuya (it's free!)

Tuya's narrative projects $464.2 million revenue and $80.0 million earnings by 2029. This requires 13.0% yearly revenue growth and about a $22.1 million earnings increase from $57.9 million today.

Uncover how Tuya's forecasts yield a $3.43 fair value, a 55% upside to its current price.

Exploring Other Perspectives

Six fair value estimates from the Simply Wall St Community span roughly US$2.25 to US$4.64 per share, showing wide disagreement among private investors. Set against Tuya’s push toward higher margin AI and PaaS offerings, this range underlines why you may want to compare several views on how durable that shift could be.

Explore 6 other fair value estimates on Tuya - why the stock might be worth over 2x more than the current price!

Decide For Yourself

Disagree with existing narratives? Extraordinary investment returns rarely come from following the herd, so go with your instincts.

• A great starting point for your Tuya research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.
• Our free Tuya research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Tuya's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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