Xiaomi's 50% Profit Warning Looms as Memory Costs and EV Losses Fuel a 47% Rout
26.06.2026 - 12:52:28 | boerse-global.de
Goldman Sachs is bracing for a second-quarter bloodbath at Xiaomi, forecasting a 50% plunge in adjusted net profit to 5.4 billion yuan. The call comes as the Chinese electronics and electric-vehicle maker watches its shares hit a fresh 52-week low of €2.37, extending year-to-date losses to 47%. The stock dropped nearly 5% in Monday's session alone, with sellers firmly in control despite a record buyback programme.
The culprit behind the earnings collapse is a structural shift in the global memory chip market. Xiaomi president Lu Weibing has pegged the price increase for smartphone DRAM at roughly five-fold since the third quarter of 2025, with TV display memory costs ballooning ten-fold. Hyperscalers such as Microsoft, Google, Meta and Amazon have hoovered up high-bandwidth memory for AI data-centre builds, forcing Samsung, SK Hynix and Micron to redirect capacity away from standard components. Every wafer destined for an Nvidia GPU is one less for a mid-range handset — and Xiaomi's stronghold in the entry-level and mid-tier smartphone segment means the margin squeeze hits hardest.
The first quarter already told a grim story. Adjusted net profit fell 43% to 6.07 billion yuan, while smartphone shipments dropped 19.2% to 33.8 million units — the steepest decline among the world's top five handset brands. Revenue slid 18% year-on-year. Counterpoint Research expects elevated memory pricing to persist until at least the end of 2027, leaving little near-term relief for Xiaomi's core business.
Should investors sell immediately? Or is it worth buying Xiaomi?
The EV division adds another layer of pressure. In Q1, the automobile unit posted an operating loss of 3.1 billion yuan, equivalent to roughly US$5,600 per vehicle delivered. Xiaomi's full-year delivery target of 550,000 units looks increasingly ambitious. With 150,317 cars handed over by the end of May, the company would need to ship around 57,500 vehicles each month from June through December — a 15% increase on its current monthly record of 50,000 units. Weakening government subsidies and rising component costs are further squeezing margins.
Management's response has been aggressive on two fronts. In early June, the board approved the largest share buyback in the company's history: up to HK$20 billion (€2.4 billion), running until the 2027 annual general meeting. The previous programme saw Xiaomi repurchase nearly 400 million shares for approximately HK$14.6 billion, but the market has shrugged it off. Short sellers now hold positions equivalent to around 9% of the free float, betting on further declines.
Meanwhile, R&D spending surged 33.4% to 9.0 billion yuan in the first quarter, and Xiaomi has earmarked 60 billion renminbi for AI over the next three years — including roughly 16 billion renminbi in 2026 alone. That investment is a long-term bet, but it offers no immediate antidote to the profit bleed.
On a technical basis, the stock is deeply oversold. The relative strength index stands at 20.6, well below the 30 threshold typically considered oversold, and the shares trade roughly 39% below their 200-day moving average of €4.08. Goldman Sachs maintains a buy rating with a 12-month price target of HK$40, arguing that current valuations represent a floor. The bank expects revenue growth to return to positive territory in the third quarter, with adjusted profit improving sequentially. Whether that optimism is justified will be tested on August 26, when Xiaomi reports second-quarter earnings. Until then, the buyback remains the loudest signal from the boardroom — and the market is turning a deaf ear.
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