Xiaomi Group's stock closed at HKD 30.88 on April 2, 2026, down 3.56%, with its market capitalization standing at HKD 800.8 billion. Since the beginning of the year, Xiaomi's share price has fallen by 21%.
Looking back, on June 27, 2025, the day after a new product launch event, Xiaomi Group's stock price briefly exceeded HKD 61, reaching a record high and pushing its market value to HKD 1.55 trillion. Compared to that peak, Xiaomi's market value has evaporated over HKD 700 billion in less than ten months.
Just days ago, a wave of criticism from a prominent investment firm thrust Xiaomi into the spotlight. Wang Wen, founder of Ridou Investment, commented publicly, questioning Xiaomi's strategic focus, suggesting the company chases trends rather than executing a long-term plan. His remarks sparked significant discussion within investment circles, given his firm's substantial influence.
However, amid the height of the skepticism, Wang Wen quickly clarified his statements, calling them offhand comments and affirming Xiaomi's strengths, while reiterating his preference for companies with concentrated core businesses.
This dramatic reversal reflects the complex sentiment in the capital markets towards Xiaomi: a blend of anxiety over the sharp stock decline and an underlying recognition of the company's potential.
Since its listing on the Hong Kong Stock Exchange in 2018, Xiaomi's stock performance has been volatile. Each significant drop has been accompanied by a different narrative. As of early April 2026, a core question remains: has the fundamental logic for valuing Xiaomi changed?
The stock's trajectory has often resembled a rollercoaster. Listed at HKD 17 on July 9, 2018, the stock initially fell below its IPO price. After a brief rally, it languished for much of 2019. A peak around HKD 35.9 was reached in 2021, but the gains were not sustained, and the price fell below the IPO level again in early 2022, causing frustration among some high-profile investors.
From late 2024 to the first half of 2025, driven by the mass production and delivery of the Xiaomi SU7 electric vehicle, which exceeded market expectations, the stock experienced a sharp rally, culminating in the June 2025 high. The compelling narrative of an integrated "Human x Car x Home" ecosystem captivated investors at the time.
This surge was supported by solid full-year 2025 results: total revenue reached RMB 457.3 billion, up 25% year-over-year, while adjusted net profit grew 43.8% to RMB 39.2 billion, both setting new records. The automotive division delivered 411,082 vehicles for the year, achieving a positive annual operating profit for the first time.
However, starting in the third quarter of 2025, Xiaomi's stock began a sustained decline. While the broader Hong Kong tech sector, as measured by the Hang Seng Tech Index, fell over 27% since early October 2025, Xiaomi's drop was steeper, at 43% over the same period.
The 2025 financial results revealed a mixed picture. While the annual figures were strong, quarterly data indicated emerging concerns. In the fourth quarter, smartphone gross margin fell sharply to 8.3%, the lowest since 2023, and automotive gross margin decreased from 25.5% in Q3 to 22.7% in Q4.
The margin compression was primarily attributed to rising costs, particularly a sharper-than-expected upcycle in global memory chip prices. In response to this pressure, Xiaomi announced price increases for three of its Redmi smartphone models, effective April 11, 2026. President Lu Weibing explained that memory price increases had been drastic, significantly impacting the cost structure of its value-focused Redmi brand. Industry forecasts suggest the price hike cycle may persist.
Perhaps more concerning are long-term expectations for smartphone sales. Reports suggest Xiaomi internally anticipates a 13% decline in handset sales for the year, prompting a strategic shift in its offline stores towards larger home appliances and improved operational efficiency, halting store expansion. IDC projects a 12.9% decline in global smartphone shipments for 2026.
Meanwhile, newer businesses like automotive remain in a capital-intensive early stage. In March 2026, Xiaomi's total vehicle deliveries exceeded 20,000 units. The new SU7 model saw strong initial orders, with lock-in orders surpassing 40,000 units by April 2. However, first-quarter cumulative deliveries were approximately 79,000 vehicles, representing only about 14% of the full-year target of 550,000 units, implying a need for monthly deliveries exceeding 52,000 for the remainder of the year. Deliveries of another key model, the YU7, also declined significantly from a December 2025 peak.
This structural challenge—"declining legacy business and cash-burning new ventures"—represents the core difficulty for Xiaomi's current valuation.
Consequently, analyst valuations have diverged. While Goldman Sachs maintained a HKD 41 target price after slightly reducing forecasts, Bank of Communications International lowered its target to HKD 37 with a "Neutral" rating, citing cost pressures. UBS reduced its target to HKD 36, arguing that the better-than-expected profit was partly due to one-off items rather than core business strength.
Amid pressures on its phone business and volatility in automotive, AI represents Xiaomi's newest strategic frontier, carrying high hopes but facing an uncertain future. In March 2026, CEO Lei Jun announced plans to invest at least RMB 60 billion in AI over the next three years, with RMB 16 billion allocated for 2026 alone. Xiaomi also launched three self-developed large language models. One model, MiMo-V2-Pro, gained significant traction among global developers, briefly topping a popular platform's usage charts.
On April 3, Xiaomi launched a token plan for developers, marking the beginning of commercializing its AI models. On the device side, an AI agent is undergoing testing, with plans for a public rollout. A key milestone anticipated for 2026 is the deep integration of self-developed chips, OS, and AI models in a single product.
However, the substantial AI investments are weighing on profitability. In Q4 2025, operating expenses related to AI and auto surged 68% year-over-year, creating a gap with modest growth in internet services revenue. Analysts have trimmed earnings forecasts to account for the profit dilution from these high investments.
In essence, Xiaomi is navigating a transitional period characterized by heavy investment and limited immediate returns. Even Lei Jun's announcement of an AI usage milestone failed to elicit a positive market reaction, suggesting investors await clearer evidence of sustainable competitive advantages and financial returns.
So, has Xiaomi's valuation logic changed? It has evolved, though not necessarily for the worse. The market now evaluates the company across multiple dimensions—phone shipments, car deliveries, AI progress, and business synergy—rather than relying on a simpler metric. This multi-faceted approach inherently increases stock price volatility.
Xiaomi's foundational business remains robust; it is still a top-three global smartphone vendor with over 700 million monthly active users and has demonstrated capable mass production and delivery in the automotive sector, achieving annual profitability.
Challenges are real: its phone business faces cost pressures and a long-term battle for premium positioning, its car business must sustain growth amid industry price wars and delivery fluctuations, and its massive AI investments need time to mature into tangible returns.
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