Xiaomi's Profit Crisis Deepens: Smartphone Margins Hit New Low as EV Losses and Goldman Warning Weigh
12.06.2026 - 13:55:19 | boerse-global.de
The narrative surrounding Xiaomi has fractured. On one side sits a technology roadmap packed with promise — a new operating system, aggressive AI spending, and an electric vehicle push destined for Europe. On the other sits a stock trading at 2.88 euros, just pennies above its 52-week floor, with analysts now forecasting a 50% profit collapse in the second quarter. The market is voting with its feet, and the message is clear: patience has run out.
Goldman Sachs issued a stark assessment for the period ending June 2026, projecting the adjusted net profit will tumble 50% to 5.4 billion yuan. While the bank expects group revenue to inch up 1% year-on-year, stripping out the EV and AI segments leaves underlying sales roughly 9% below the prior-year level. Goldman maintained its "Buy" rating, suggesting the long-term thesis remains intact — but the near-term numbers are unforgiving.
That prognosis follows a first quarter that already laid bare the pressures. Revenue fell nearly 11% to 99.1 billion yuan, while adjusted net profit collapsed 43% to 6.1 billion yuan. The smartphone division, long Xiaomi's backbone, delivered a gross margin of just 10.1%, hammered by surging memory-chip costs. Shipments of 33.8 million units represented a 19% year-on-year drop — the steepest decline among the top five handset makers. More than half of those sales came from the sub-$200 price bracket, precisely where component inflation hits hardest.
Apple and Samsung face no such margin squeeze; their grip on premium pricing absorbs cost shocks. Xiaomi, along with rivals OPPO and Vivo, is clawing upward into higher price tiers. The strategy is sound, but it takes time the market is unwilling to grant.
Should investors sell immediately? Or is it worth buying Xiaomi?
Meanwhile, the electric vehicle business continues to bleed cash. In the first quarter, the EV segment posted an operating loss of 3.1 billion yuan on revenue of 19.9 billion yuan — a sharp reversal from the brief profitability it touched a year earlier. Xiaomi still targets 550,000 vehicle deliveries this year, about 34% more than in 2025. Through April, it had delivered roughly 118,000 units, a gain of just 13% — short of the pace needed. The broader Chinese EV market is also softening: wholesale sales of extended-range models fell nearly 25% in May, the biggest monthly contraction in five years.
Management has tried to signal confidence through a new share buyback program worth up to 20 billion Hong Kong dollars over twelve months. Since the annual general meeting on June 2, the company has repurchased 14.3 million shares — a mere 0.06% of the float. On June 11 alone, it bought 7.8 million shares, the 70th such transaction this year. Yet the stock keeps sliding. Buybacks can signal intent, but they cannot fix a broken margin structure or accelerate EV profitability.
On the technology front, Xiaomi is pressing ahead. HyperOS 4 will replace the long-running MIUI interface in August, built on Flutter and Rust for leaner, more secure code. On-device AI tools for image editing and transcription will operate without cloud dependency, and the system will link smartphones, wearables, and EVs seamlessly. A robotic charging arm that plugs into the car autonomously was also showcased. R&D spending this year exceeds 16 billion yuan, with 80 trillion of a planned 100 trillion tokens already allocated for AI model training.
Xiaomi at a turning point? This analysis reveals what investors need to know now.
European investors have reason to watch closely. Xiaomi intends to internationalize its EV business in the second half of 2027, with Europe as the first port of call. The Munich research and design center, opened in 2025, is led by Rudolf Dittrich, a 15-year BMW veteran, while former iX3 engineer Claus-Dieter Groll oversees driving dynamics. But the EU’s additional tariffs on Chinese EVs, imposed after an anti-subsidy investigation, raise entry costs before a single car is sold in Frankfurt or Madrid.
CEO Lei Jun has warned that memory-chip cost pressure will persist for at least another two years — the most honest, and most uncomfortable, guidance shareholders have received. Technically, the stock’s relative strength index has dropped to 30.6, hovering on the edge of oversold territory, while the share price sits more than 31% below its 200-day moving average. The next major test will come with the second-quarter report. If Goldman’s profit-halving forecast proves accurate, the support at 2.82 euros — the 52-week low — will face a serious challenge.
Ad
Xiaomi Stock: New Analysis - 12 June
Fresh Xiaomi information released. What's the impact for investors? Our latest independent report examines recent figures and market trends.
