Xiaomi's Two-Speed Reality: Record SUV Demand Masks a Deepening Profit Squeeze
Published on 08/06/2026 at 12:32 | Redaktion boerse-global.de
The arithmetic at Xiaomi is getting harder to ignore. While the company's order books for its new hybrid SUVs are overflowing and its product pipeline is busier than ever, the share price keeps sliding. The stock fell 3.45 percent on the day to EUR 2.95, extending a weekly decline of 13.15 percent that leaves the shares 54.85 percent below their 52-week high of EUR 6.54. The market, it seems, is pricing in a problem that the company's own momentum cannot yet offset.
That problem has a name: DRAM. Rising memory-chip prices and heavy capital expenditure are squeezing margins just as Xiaomi prepares to publish its unaudited second-quarter results on August 18. The pressure is not new. In the first quarter of 2026, the smartphone gross margin had already slipped to 10.1 percent, while revenue fell 10.9 percent to RMB 99.1 billion and adjusted net profit tumbled 43.1 percent to RMB 6.1 billion. Those figures explain why investors are bracing for more pain rather than celebrating the company's headline successes.
The analyst community is split down the middle on what comes next. Henry Soediarko of Smartkarma reaffirmed his bearish stance on the stock, warning that cash reserves are being consumed by the electric-vehicle division's heavy investment needs and the drag from the DRAM price cycle. On the same day, however, his colleague Ming Lu argued that the market's pessimism is overdone, pointing to the long-term scaling potential of the EV business. The consensus twelve-month price target for the Hong Kong listing (1810.HK) sits at HKD 46.77, with a maximum target of HKD 75.00 — a range wide enough to reflect just how uncertain the outlook has become.
The Bull Case: An SUV That Has Already Found Its Audience
What keeps the optimists engaged is the reception to the Sky Nomad series, the company's new EREV (Extended Range Electric Vehicle) SUV line. Production of the N70 and N90 models has officially started in Beijing, with the China launch slated for September 2026. Pricing starts at RMB 259,900 for the N70 and reaches RMB 299,900 for the N90, positioning Xiaomi firmly in the premium family-SUV segment. Within the first week, pre-orders surpassed 100,000 units according to dealer surveys, with more than 30,000 of those coming from the Beijing-Tianjin region alone — a striking validation of demand for the seven-seat N90 in particular.
Should investors sell immediately? Or is it worth buying Xiaomi?
The EV division generated RMB 19.9 billion in revenue in the first quarter of 2026 on more than 80,000 deliveries. The question now is whether the profitability of that simpler all-electric lineup can survive the transition to the more complex hybrid architecture. There is at least one encouraging data point: the operating margin in the "Handset + AIoT" segment rose 200 percent quarter-on-quarter in Q1, suggesting the core business still has pricing power. The risk is that research spending — which reached RMB 9 billion recently — and the capital intensity of hybrid production erode those gains.
The Bear Case: Chart, Competition, and a Lofty Delivery Target
The skeptics have plenty of ammunition of their own. The stock has roughly halved over the past twelve months and sits 17.59 percent below its 200-day moving average, a textbook sign of a persistent downtrend. Volatility is unusually elevated, leaving the shares exposed to external shocks such as weak Chinese economic data.
Competition in the automotive space is fierce, with BYD and Li Auto both defending their turf aggressively. The US market remains effectively closed to Xiaomi due to 100 percent tariffs. And the company's full-year delivery target of 550,000 vehicles is looking ambitious: only around 220,000 units had been delivered by the end of July. A significant miss would undermine confidence in the scalability of the auto business.
What Happens Next
Two dates matter in the near term. On August 11, Xiaomi unveils the Redmi K100 Pro Max, a flagship smartphone featuring the Snapdragon 8 Elite Gen 5, a 9,070 mAh battery, and a 185 Hz display — a test of whether the core handset business can still generate excitement. The company has also announced its first participation in IFA Berlin in September, a signal of intent to deepen its European presence.
The more consequential test comes in September, when the first official delivery figures for the Sky Nomad series will show whether those 100,000-plus pre-orders translate into actual sales. A smooth transition from reservation to delivery would give the bulls a tangible proof point that the hybrid bet is working. A stumble would likely extend the share price slide.
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Management, for its part, appears to believe the stock is undervalued: the buyback program has consumed roughly HKD 8.4 billion since the start of the year, according to a mandatory filing with the Hong Kong exchange. The company also open-sourced its "Xiaomi Robotics-1" model on August 5, underscoring its ambition to embed AI across its hardware ecosystem.
The stock's current market capitalization stands at EUR 82.25 billion. Whether that valuation holds will depend on which of Xiaomi's two realities wins out over the coming weeks: the operational momentum of a company selling 100,000 SUVs in a week, or the margin erosion of a business paying record prices for memory chips. The shares trade 26.21 percent above their 52-week low of EUR 2.34 — a sign that even the bears have not fully capitulated. But with Q2 earnings due in twelve days, the burden of proof rests squarely on the company's cost side of the ledger.
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