After turning losses into profits, Tuya Smart is set to accelerate its embrace of AI.
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Author | Huang Yu
In the past two years, Tuya Smart has become a beneficiary of the AI large model wave, successfully turning its annual net profit from a loss to a gain. Based on this, Tuya Smart continues to bet on an AI-driven development path.
On May 12, Tuya Smart announced its unaudited financial results for the first quarter of 2026, with total revenue increasing by 8.3% year-on-year to $80.9 million and net profit rising by 43.6% year-on-year to $15.8 million.
While maintaining profit growth, Tuya Smart further reinforced its "AI" label in this financial report.
The previously long-listed "Software as a Service (SaaS) and others" was renamed "AI Applications and others"; and the hardware-integrated "Smart Solutions" became "Smart Home and Robot Products".
Tuya Smart explained in its financial report that this change reflects the group's established strategy to fully integrate AI capabilities into all software products. In the future, the AI Applications and others segment will focus on providing subscription-based value-added services driven by large-scale AI models, while the Smart Home and Robot Products segment will focus on AI-driven consumer electronics and home robots.
However, growth in Tuya Smart’s AI-related business segments remains unstable for now.
The financial report shows that in the first quarter of 2026, Tuya Smart’s revenue from AI Applications and others was approximately $11.6 million, up 16.9% year-on-year, mainly due to increased cloud service revenues; revenue from Smart Home and Robot Products declined by 6.9% year-on-year to $10.2 million.
Even so, in Tuya Smart’s strategic planning, AI-related business will gradually become an important pillar for long-term growth.
Tuya Smart’s founder and CEO Wang Xueji stated that the company is accelerating the transformation of AI capabilities from the platform layer to application layer and scenario-based products.
Seeking growth through AI is the new story Tuya Smart must continue to tell.
From objective data, this new story does bring Tuya Smart considerable commercial momentum.
As of March 31, the number of registered AI developers on the Tuya Smart platform had already exceeded 1.97 million, an increase of 9.4% compared to about 1.801 million on December 31, 2025.
This shows that in 2026, when global AI implementation is fully involved in the application layer, Tuya Smart’s underlying platform stickiness is still rising.
Looking at the company’s overall profitability, while Tuya Smart continues to maintain single-quarter profits, its CFO Yang Yi revealed that this is mainly thanks to optimized operational efficiency and continued improvement of the cost structure.
In terms of overall business gross margin, in the first quarter of 2026, Tuya Smart’s overall gross margin dropped to 46.9%, a decline of 1.6 percentage points compared with 48.5% in the same period of 2025.
As the pillar of revenue, the core business Platform as a Service (PaaS) recorded $59 million in income that quarter, a 9.8% year-on-year increase, but its gross margin slipped from 48.4% to 46.1%. The gross margins of AI Applications and others, and Smart Home and Robot Products, also saw slight decline.
Having ample cash on hand is Tuya Smart’s greatest confidence to firmly bet on AI in an uncertain future.
According to the financial report, as of March 31, Tuya Smart had more than $1 billion in cash and various liquidity investments on its books.
For a company with quarterly total revenue of only about $80 million, an asset reserve of over $1 billion means very strong financial support.
Yang Yi also said that this ample funding provides sufficient resources and strategic flexibility for the company’s ongoing investment in AI and global expansion.
Tuya Smart’s next three major strategic focus areas are very clear: AI application innovation, expansion of global solution offerings, and developer ecosystem building.
In this wave of pragmatic soft and hardware reconstruction, Tuya Smart has just managed to turn losses into profits and can advance lightly, but the real deep water lies ahead.
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