Xiaomi is living a tale of two realities. On one hand, the Chinese tech giant is flexing its engineering muscle with a blistering new electric SUV and a multi-billion-dollar AI push. On the other, its stock is plumbing the depths of a 52-week low, battered by soaring memory-chip costs that are squeezing the life out of its core smartphone business.
The company’s latest automotive salvo was unveiled at the ongoing Beijing Auto Show, where the spotlight fell on the YU7 GT, a high-performance SUV packing over 1,000 horsepower. Developed in large part by Xiaomi’s Munich research center—staffed with former BMW and Porsche powertrain engineers—the model is slated for a formal Chinese launch at the end of May. Xiaomi claims a range of 705 kilometers for the vehicle. Alongside it, the company showcased the Vision GT, a concept hypercar built on a 900-volt architecture that can sprint to 100 km/h in under one second, underscoring its technological reach.
The auto offensive doesn’t stop at home. Xiaomi is laying the groundwork for a European entry by 2027, with the continent as its first overseas target. It has hired Dieter Lorenz, who previously ran Tesla’s delivery operations in Central Europe, to spearhead the buildout. The company is actively recruiting sales executives in Germany, France, and Spain, and a recent visit by Spain’s prime minister to Beijing has fueled speculation that the country could become a production hub.
The numbers on the operational side are encouraging. Xiaomi delivered around 80,000 vehicles in the first quarter of 2026, bringing cumulative deliveries since the April 2024 launch to half a million units. The automotive division is already profitable, having posted a three-digit million profit last autumn. The full-year delivery target stands at 550,000 EVs, and management expects auto revenues to contribute a significantly larger share of group earnings by the end of 2026.
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Yet the stock market remains utterly unimpressed. Shares closed Friday at €3.38, exactly matching their 52-week low, and have shed nearly 25% since the start of the year. The stock trades well below all key moving averages, with the gap to the 200-day line stretching to almost 28%—a textbook sign of a bearish trend.
The culprit is the smartphone business. Memory-chip prices have nearly doubled in the first quarter of 2026, hammering margins. Adjusted net profit plunged 24% in the fourth quarter of 2025. Despite the headwinds, management is sticking to its target of an 8% gross margin in the smartphone segment this year and has begun selectively raising prices to offset the cost pressure.
To counter the drag, Xiaomi is pouring resources into artificial intelligence. Over the next three years, it plans to invest around 8.7 billion US dollars (60 billion yuan) in AI, with a key project being the new MiMo-V2-Pro language model, currently in beta testing. HSBC Research has maintained a buy rating on the stock, citing the strategic pivot positively.
The Beijing Auto Show runs until early May, and market watchers expect further details on the YU7 GT’s pricing. Meanwhile, Xiaomi has a solid foundation for its European push: premium smartphone sales in Western Europe rose roughly 40% last year, providing a ready-made customer base for its EVs. The next big test comes on May 26, when the company reports detailed quarterly results. That data will reveal just how deeply the chip-cost crisis is cutting into core profitability—and whether the stock’s slide can be halted.
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