Xiaomi Fights a Two-Front War: Stock Near Lows Despite Record Buyback and AI Talent Blitz

Xiaomi has pumped nearly 10.9 billion Hong Kong dollars into its own shares this year, making it the third-largest buyer of its own stock at the Hong Kong exchange behind only Tencent and AIA Group. Yet the market is barely blinking. The stock trades at 2.44 euros, barely a whisker above its fresh 52-week low of 2.34 euros, and has shed almost 46% of its value since January. The gap between management's signal of confidence and investor sentiment has rarely been wider.

The fundamental drag is clear: memory chip prices have exploded. Xiaomi president Lu Weibing disclosed that contract prices have quintupled since the end of 2025, driven by Samsung and other suppliers redirecting capacity to AI data centres. That is a brutal problem for a company that sells 62% of its smartphones for under $200 — there is almost no room to pass on cost increases in that budget segment. The pain is already showing. First-quarter adjusted net profit collapsed by more than 43%, revenue fell to 99.1 billion yuan, and Goldman Sachs is forecasting a 50% earnings plunge for the second quarter, which Xiaomi will report on 26 August.

The electric vehicle division is pouring fuel on the fire. In Q1, the unit posted an operating loss of 3.1 billion yuan, equivalent to roughly $5,600 lost per car delivered. The company is aiming to deliver about 550,000 vehicles this year, but only just over 150,000 had reached customers by end of May. That means Xiaomi needs to hand over roughly 57,500 cars per month from now on — well above its previous record. Jefferies has already trimmed its own annual forecast to just under half a million units. A new sub-brand called Skynomad, targeting the family SUV segment, is slated for a fourth-quarter launch in an effort to revive momentum.

Should investors sell immediately? Or is it worth buying Xiaomi?

Short sellers are circling. Bearish positions have swelled to around 9% of the free float, betting that the headwinds will intensify. The company's record buyback programme — authorised for up to 20 billion Hong Kong dollars — has so far done little to stem the bleeding. Meanwhile, research and development spending jumped by a third to 9 billion yuan, and Xiaomi has committed another 60 billion renminbi to artificial intelligence over the next three years.

On Monday, founder Lei Jun laid out the AI strategy in more detail: deep integration of artificial intelligence across what he calls the "human-car-home" ecosystem, linking smartphones, EVs and household appliances. To execute that vision, the company has launched a global recruitment drive for so-called "genius talents" — a search for top engineers in AI and connected hardware. The talent hunt is ambitious, but without the right people the ecosystem promise remains theoretical.

Xiaomi's broader product range offers some bright spots. In May it ranked first in China's online camera market by both volume and revenue. A new smart electric pressure cooker, the Mijia 2 Pro priced at 899 yuan, illustrates the strategy of differentiating home appliances through smart features rather than price alone. But these wins are still small relative to the scale of the core headwinds.

The critical moment comes on 26 August. If the second-quarter numbers confirm the 50% profit drop that Goldman expects, the stock faces another stress test. Until memory costs stop squeezing the core handset business, the buyback machine and the AI push will be fighting a rearguard action.

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