The market’s verdict on Xiaomi has been harsh in 2026, with the stock down roughly 28 percent year-to-date. Yet the Chinese technology group is responding not with caution, but with one of the most aggressive capital deployment strategies in its history — pouring billions into artificial intelligence and European expansion while simultaneously buying back its own shares at a furious pace.
It amounts to a bet that the current earnings slump is a temporary setback rather than a structural problem. The evidence for that thesis, however, remains decidedly mixed.
A Quarter That Gave Investors Little Comfort
The numbers released in May for the first quarter of 2026 painted a sobering picture. Revenue fell to 99.142 billion yuan, a decline of 10.9 percent from the same period a year earlier. The damage was far worse on the bottom line: net income under GAAP accounting tumbled 57 percent to 4.72 billion yuan, while the adjusted figure dropped 43.1 percent to 6.07 billion yuan. Gross margin came in at 22.0 percent.
The smartphone business, long the company’s cash cow, saw segment revenue slide 12.5 percent to 44.273 billion yuan, down from 50.612 billion yuan in the prior-year quarter. A crisis in memory chip pricing and thinning margins in handsets were the primary culprits, according to the company’s disclosures. The electric vehicle and AI innovation segment added to the pain with an operating loss of 3.1 billion yuan — a stark reversal from the segment’s profitable full-year 2025 performance.
One bright spot stood out: the AIoT platform, which excludes smartphones, tablets and laptops, grew connected device count by 18.5 percent year over year to 1.119 billion units, with corresponding revenue up 18.5 percent.
A Counter-Cyclical Spending Spree
Rather than retrenching, Xiaomi has chosen to double down. In late June, the company unveiled plans for global research and development investments exceeding 24 billion euros between 2026 and 2030, targeting artificial intelligence, electric vehicles, robotics and operating systems. Europe is slated to become a central innovation hub in that strategy.
The commitment was given more concrete form in early July, when Xiaomi confirmed its debut at the IFA trade show in Berlin from September 4 to 8. The company will present its “Human × Car × Home” ecosystem to a European audience for the first time, alongside several product premieres. According to Handelsblatt, the group has earmarked 7.4 billion euros specifically for AI research between 2026 and 2028.
Should investors sell immediately? Or is it worth buying Xiaomi?
Adding to the narrative momentum, reports have emerged that Stellantis is in talks with both Xiaomi and rival Xpeng about potential cooperation, which could extend to equity stakes in European automotive brands. While unconfirmed, the discussions have fueled speculation about Xiaomi’s ambitions beyond its home market.
Buybacks as a Signal of Conviction
On the same day the disappointing first-quarter results were published, Xiaomi’s board approved a new share repurchase program of up to 20 billion Hong Kong dollars in Class-B shares, running for twelve months from June 2. That replaced a previous mandate under which the company had already bought back roughly 399.6 million Class-B shares for about 14.6 billion Hong Kong dollars.
A separate automated buyback program of up to 4 billion Hong Kong dollars launched in June, set to run until the end of 2026 or until fully utilized. Between June 3 and July 15, Xiaomi executed 14 tranches of purchases totaling approximately 100.7 million Hong Kong dollars in value, at average prices ranging from 25.82 to 28.65 Hong Kong dollars per share. In total, the company retired roughly 79.8 million shares, representing 0.31 percent of its share capital.
The message to the market is unambiguous: management considers the share price decline overdone and is willing to put its own capital behind that view.
What the Charts Say
The technical picture remains challenging. The stock recently traded at 3.04 euros, sitting 17.43 percent below its 200-day moving average — a sign that the medium-term downtrend is still intact, even after a recent session brought a 2.17 percent bounce. At its latest level of 3.11 euros, the shares were up 2.22 percent on the day, though still down 28.24 percent for the year.
The company has maintained its delivery target of 550,000 electric vehicles for 2026, a significant step up from the 410,000 units delivered in 2025. Whether that goal remains achievable given the segment’s losses will be a key focus when second-quarter results arrive on August 18.
That date now looms as the next major catalyst. Investors will be watching closely to determine whether the weakness of the first quarter was a one-off or the beginning of a longer trend — and whether Xiaomi’s twin strategy of heavy investment and share buybacks can restore confidence in a stock that has shed nearly a third of its value this year.
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