Xiaomi has posted the strongest financial performance in its history, yet its shares trade nearly 46% below their annual peak. The market’s muted reaction underscores a focus on future challenges rather than past triumphs.
Financial Performance Hits New Highs
For the 2025 fiscal year, the company reported a 25% year-over-year surge in total revenue, reaching 457.3 billion yuan. The growth in adjusted net profit was even more pronounced, jumping 43.8% to 39.2 billion yuan. Despite these record figures, investor sentiment remains cautious, with the stock recently trading at 3.59 euros, approximately 20% below its level at the start of the year.
The Smartphone Margin Dilemma
Market experts point to rising costs for memory chips and other components as a primary concern. These increases are applying short-term pressure on gross margins within Xiaomi’s core smartphone business. A critical test for the company will be its ability to pass these higher costs onto consumers through price adjustments for new models without sacrificing its hard-won market share. The first quarterly report of 2026, scheduled for release on May 27, 2026, is anticipated to provide initial clues on this front.
Electric Vehicle Division Powers Ahead
In contrast, the electric vehicle (EV) segment represents a clear and accelerating success story. For the first time in 2025, this division reported a positive operating profit of 900 million yuan. Deliveries soared to 411,082 vehicles, substantially exceeding the original target of 300,000 units.
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The momentum has continued into 2026. The launch of the new SU7 generation on March 19, 2026, generated significant buzz, securing 15,000 firm reservations within the first 34 minutes and over 30,000 after just three days. Building on this strength, management has set an ambitious delivery target of 550,000 vehicles for the full year 2026.
Artificial Intelligence Fuels the Future
Parallel to its automotive ambitions, Xiaomi is making substantial investments to position itself at the forefront of artificial intelligence. The company has committed 60 billion yuan over three years to AI development, with over 40 billion yuan earmarked for research and development in 2026 alone. Key initiatives include the MiMo-V2 family of AI models and advancements in humanoid robotics. These robots are already deployed in Xiaomi’s own EV manufacturing plants, where they perform autonomous assembly tasks with a reported success rate exceeding 90%.
Divergent Analyst Views
This mixed picture of record profits and looming challenges is reflected in divergent analyst ratings. Goldman Sachs maintains a “Buy” recommendation with a price target of 41 HKD. J.P. Morgan, however, advises a more cautious “Hold” stance. The upcoming quarterly report at the end of May will be scrutinized for evidence that the operational strengths of the record 2025 fiscal year can be sustained into the new business period.
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