Amazon India is doubling down on artificial intelligence (AI) in consumer electronics, launching a dedicated AI store as demand for smarter devices accelerates across the country, including smaller towns.

The move comes at a time when the company says AI is no longer a niche feature but a central driver of purchase decisions, even as the industry grapples with rising costs from memory chips, logistics disruptions linked to the West Asia conflict, and currency pressures.

“We believe AI is not something customers are going out looking for as a feature anymore. It has become a way of life,” Zeba Khan, director of Consumer Electronics at Amazon India told Fortune India. 

The AI store, launched as an evergreen destination on the Amazon app, curates a tight selection of AI-powered products across nine categories including smartphones, laptops, televisions and appliances. Each of the nine categories feature four to six products, aimed at simplifying choices in what Khan described as a “very overwhelming” category for consumers. 

Interestingly, searches for AI-powered devices on Amazon.in have risen 60% year on year, with laptops and tablets leading at over 80% growth, followed by televisions at nearly 40%. Notably, nearly two-thirds of these searches are coming from tier 2 and tier 3 cities.

“What we saw from search data and customer anecdotes is that people want AI devices but don’t fully understand what each feature would do. So, we created a store that simplifies and educates, and brings the best selection in one place,” Khan said. 

Seasonal demand for cooling products, a key driver for the category, is also beginning to pick up after a muted start. Unseasonal rains and hailstorms in North India through March weighed on early summer sales, particularly for air conditioners. However, demand has started improving from the first week of April, with a visible pickup in searches and buying activity.

“March didn’t exactly pan out as expected, but after the first week of April we are seeing demand pick up. AC searches have increased again,” Khan said. 

The AI store also features curated selections in this segment, highlighting products with features such as automated temperature control and energy savings.

Premium push gathers pace beyond metros

The AI push is closely tied to a broader premiumisation trend in India’s electronics market. Amazon said 85% of its new customers in the category are coming from smaller cities, with many directly opting for higher-end products.

In personal computing, AI-powered laptops have emerged as a key growth driver. “In Q1, our AI-powered laptops grew almost 3x,” Khan said, adding that AI devices now account for nearly a quarter of the PC category, up sharply from early expectations of 5–10%. 

Even in categories like televisions and appliances, AI features are shaping buying behaviour. Around 70% of customers are looking for AI features in TVs, while smart and energy-efficient air conditioners are seeing faster adoption. Affordability levers are playing a role in this shift. About 30% of premium device purchases are now happening on no-cost EMI, enabling consumers to upgrade despite rising prices. 

Cost pressures build under the surface

The AI-led growth story, however, is unfolding alongside mounting cost pressures across the industry.

A sustained rise in memory chip prices over the past five to six months, coupled with supply disruptions and higher logistics costs linked to the West Asia conflict, has pushed up input costs. A weakening rupee has added to the burden.

Entry-level electronics prices are already climbing back to levels last seen six to eight years ago, reversing a long-standing trend of falling prices.

Khan acknowledged the pressure. “Cost pressures are there. It’s something we have to acknowledge. It’s beyond our control and manufacturers are facing the same dilemma,” she said. 

Companies are also dealing with regulatory changes such as stricter energy efficiency norms, which are expected to increase prices of appliances by 3–8%, with an average impact of around 5%. Rising input costs, particularly copper, are likely to further push up prices, especially in air conditioners.

Despite this, Amazon is betting that demand will hold, aided by financing options and strong consumer aspirations. “If we can provide the right affordability levers, customers are willing to buy what they aspire to,” Khan said. 

For now, early signs are holding up. The company reported a strong start to the year, with growth across categories and performance ahead of industry benchmarks in Q1CY26, even as supply-side challenges persist.