Tuya's AI Pivot Drives Profitability and Growth in Q1 2026

SANTA CLARA, CA – May 11, 2026 – Tuya Inc. (NYSE: TUYA; HKEX: 2391), a global AI cloud platform provider, today announced robust first-quarter financial results for 2026, demonstrating significant progress in profitability and sustained revenue growth driven by a strategic pivot deeper into artificial intelligence. The company reported total revenues of US$80.9 million, an 8.3% increase year-over-year, and a net profit of US$15.8 million, a substantial jump from US$11.0 million in the same period last year.

The results, which met analyst earnings per share expectations, underscore the successful execution of the company's AI-centric strategy. Following the announcement, market sentiment remained cautiously positive, with analysts maintaining a bullish consensus and price targets suggesting considerable upside. The performance highlights Tuya's ability to translate its vision for "Physical AI" into tangible commercial outcomes, even as it navigates a complex global economic landscape.

An AI-Fueled Financial Turnaround

At the heart of Tuya's Q1 success is a clear and aggressive focus on integrating AI across its entire product portfolio. The company underscored this strategic shift by renaming two of its core revenue streams. The segment formerly known as "SaaS and others" is now "AI application & others," while "Smart solution" has been rebranded to "Smart home & robot product." These changes are more than cosmetic, reflecting a deeper commitment to AI-enabled services and hardware.

The strategy is yielding impressive results. The newly christened "AI application & others" segment was the standout performer, with revenue surging 16.9% year-over-year to US$11.6 million. This growth was attributed to the expanding adoption of cloud-based software offerings infused with AI capabilities, such as the company's AI Guardian and Energy Butler services.

Tuya's core Platform-as-a-Service (PaaS) business also showed healthy growth, with revenue climbing 9.8% to US$59.0 million. This was achieved despite what the company described as "disruptions in the international business environment due to tariff-related headwinds."

"Strategically, we continue to pursue AI-driven development, harnessing AI capabilities to accelerate the deployment of application-level solutions and scenario-based products," said Mr. Xueji (Jerry) Wang, Founder and CEO of Tuya. He noted that the continued growth in AI-related business revenue highlights the company's "steady progress in commercialization and accelerated deployment."

This AI-first approach aims to transform IoT devices from reactive gadgets into proactive, intelligent companions that can anticipate user needs, a concept Tuya calls "Physical AI."

Resilience Amidst Global Market Turbulence

Tuya's strong profitability metrics are perhaps even more telling than its revenue growth. The company achieved a GAAP operating margin of 9.2%, a dramatic 11.1 percentage point improvement from a negative 1.9% margin in the first quarter of 2025. This swing to profitability demonstrates significant operational leverage and disciplined cost management.

The achievement is particularly noteworthy given the persistent global challenges. The company's report acknowledged a slight dip in gross margin to 46.9%, partly due to "recent price fluctuations in the semiconductor supply chain." This reflects a broader industry reality in 2026, where targeted shortages of mature-node chips and supply chain disruptions, such as a global helium crisis, have created volatility.

Furthermore, Tuya has been contending with "tariff-related headwinds" since April 2025. The company has previously stated it is mitigating these geopolitical risks through a diversified global manufacturing base and by expanding its presence in markets like Europe and Southeast Asia.

Mr. Yi (Alex) Yang, Director and CFO of Tuya, commented on the company's financial fortitude. "Profitability continued to improve...demonstrating continued operating leverage and disciplined cost management," he stated. "We maintained a solid balance sheet, with over US$1.0 billion in cash and liquid investments, providing flexibility to support continued investment in AI and global expansion." This strong cash position provides a crucial buffer and the necessary capital to continue investing in innovation through market cycles.

The Developer Ecosystem: Fueling the Future of Physical AI

Underpinning Tuya's strategic success is the rapid expansion of its developer ecosystem. The company reported that its base of registered AI developers surpassed 1.97 million as of March 31, 2026, a remarkable 9.4% increase in just three months. This growing army of developers is the engine driving the creation and deployment of new AIoT applications on Tuya's platform.

This ecosystem is not just growing in size but also in sophistication. Tuya is actively empowering its developer community with advanced tools, including an AI agent development framework called TuyaClaw, which enables low-code or no-code implementation of AI capabilities. The platform has also been integrated with leading large language models from OpenAI, Gemini, and others, simplifying the development process for creating intelligent, responsive products.

This collaborative innovation is translating into real-world products that are reaching consumers globally. Partners are leveraging the platform to launch everything from smart home security systems in Mexico to interconnected appliance ecosystems in Spain and advanced energy optimization solutions in Southeast Asia. This vast and active community helps accelerate the practical deployment of AI in everyday objects, from smart plugs to home companion robots, solidifying Tuya's central role in the expanding AIoT market.

Analyst Confidence and a Cautiously Optimistic Outlook

Looking ahead, Tuya's leadership projects a cautiously optimistic view of the market. While the operating environment remains complex, they see signs of normalization and recovering demand. The company's business outlook emphasizes that global AI development is entering a new stage of "application-led growth," where the focus is shifting from foundational models to practical, real-world use cases—a trend that plays directly to Tuya's strengths.

Wall Street appears to share this optimism. Analyst consensus on Tuya stock is bullish, with multiple "Buy" ratings and price targets suggesting a potential upside of over 30% from its current trading price. This confidence is bolstered by the company's proven ability to generate positive free cash flow, maintain a strong balance sheet, and successfully pivot its strategy around high-growth AI opportunities.

While Tuya acknowledges that its trajectory can be influenced by external factors like consumer demand shifts, trade policies, and geopolitical uncertainties, its first-quarter performance sends a clear message. By combining strategic AI innovation with disciplined operational execution and the power of a vast developer network, Tuya is positioning itself not just to weather the current complexities but to lead the charge in the era of Physical AI.