Xiaomi's Contradictory Signals: A Record Buyback Meets an Aggressive Phone Target Amid a Profit Squeeze
Published on 07/23/2026 at 08:12 | Redaktion boerse-global.de
The Chinese electronics giant is sending mixed messages to the market. On one hand, Xiaomi has just reported its worst quarterly profit decline in recent memory, with adjusted net income plunging 43.1% to 6.07 billion yuan in the first quarter of 2026. On the other, the company is simultaneously launching a massive HK$20 billion share buyback program and raising its full-year smartphone shipment target to 110 million units — a bold 22% increase from its previous goal of 90 million.
The disconnect between operational reality and corporate ambition is stark. Revenue for the January-March period fell 10.9% to 99.1 billion yuan, snapping a five-quarter streak of exceeding the 100 billion yuan threshold. The smartphone division — Xiaomi's core business — bore the brunt of the damage, with revenue sliding 12.5% to 44.3 billion yuan as shipments dropped 19.2% to 33.8 million devices.
The culprit, according to company president Lu Weibing, was a punishing spike in memory-chip costs. A standard 12GB RAM and 512GB storage package, he explained in April, cost Xiaomi roughly 1,500 yuan more than in 2025 — a margin-eroding burden that forced the company to slash production in the budget segment where price sensitivity is highest.
Yet it is precisely that entry-level market where Xiaomi now plans to deploy the bulk of its additional 20 million units. The about-face comes as industry pushback against component suppliers gains momentum: OPPO and vivo have both rejected Samsung's latest quarterly pricing for memory chips, signaling that the cost spiral may be cooling faster than analysts anticipated. Xiaomi appears to be betting on that stabilization, ramping up production in the very segment that suffered most from the chip squeeze.
Should investors sell immediately? Or is it worth buying Xiaomi?
The buyback program, which began on June 2 and follows more than HK$8.4 billion in share purchases already executed this year, reads as an attempt to shore up investor confidence. The stock fell 4.57% in Hong Kong to HK$28.4 after the earnings release, while in Frankfurt it closed at €2.98, down 3.01% on the day. Year-to-date losses stand at roughly 31%, and the share price remains 54% below its 52-week high of €6.51 from September 2025.
Xiaomi has ample firepower for the repurchase: the company reports cash reserves exceeding 220 billion yuan. But the buyback alone may not be enough to reverse the broader downtrend. While the stock has gained 17.21% over the past month, it still trades 21.24% below its 200-day moving average of €3.79, and 30-day volatility remains elevated at 45.63%.
There are bright spots elsewhere in the business. The automotive and AI division posted revenue growth of 6.9% to 19.86 billion yuan, delivering 80,856 vehicles during the quarter. The SU7 electric sedan remains China's best-selling pure EV above the 200,000 yuan price point, while the sportier YU7 GT set a lap record for SUVs on the Nürburgring Nordschleife. Yet the unit remains deep in the red, posting an operating loss of 3.1 billion yuan.
Xiaomi at a turning point? This analysis reveals what investors need to know now.
Xiaomi is pouring resources into future growth: group-wide R&D spending jumped 33.4% to 9 billion yuan, with at least 16 billion yuan earmarked for AI development this year and more than 60 billion yuan planned over three years. The company's open-source language model, MiMo-V2.5-Pro, it claims, is globally competitive with leading alternatives.
For now, the market is weighing two competing narratives. One points to a company aggressively buying back its own stock while raising production targets in a segment that just suffered a near-20% shipment collapse — a bet that memory prices will normalize faster than consensus expects. The other sees a smartphone business under structural margin pressure, an EV unit burning cash, and a stock that has lost nearly a third of its value this year. The buyback may provide a floor, but whether it can restore confidence will depend on how quickly the chip-cost headwind actually abates.
Ad
Xiaomi Stock: New Analysis - 23 July
Fresh Xiaomi information released. What's the impact for investors? Our latest independent report examines recent figures and market trends.
Disclaimer regarding our articles: No investment advice, no buy or sell recommendation. Information on prices, companies, and markets is provided without guarantee; changes are possible at any time. Stock market transactions can lead to substantial losses. Our articles are created and reviewed in whole or in part automatically with the support of AI.
