Diverging Views on Xiaomi as Analysts Clash Over AI Prospects

Xiaomi KYG9830T1067

Xiaomi shares experienced notable trading activity on Thursday, declining 2.5% to close at HKD 40.20. This movement occurred against a backdrop of sharply conflicting analyst recommendations and significant capital flows from mainland China, highlighting a clear split in market sentiment toward the Chinese technology conglomerate.

The investment firm Jefferies took a decisive step on December 18, downgrading its rating on Xiaomi to "Hold" from a more bullish stance. Accompanying this downgrade was a reduction in its price target, which was lowered to HKD 43.36 from HKD 49.21. Jefferies' analysts expressed a cautious outlook, citing tempered expectations for the company's near-term operational performance. This revised assessment contributed to downward pressure, leaving the stock trading well below its 52-week high of HKD 61.45.

In stark contrast, Goldman Sachs reaffirmed its confidence with a "Buy" recommendation. The bank's optimism is heavily centered on Xiaomi's advancements in artificial intelligence, specifically highlighting the new open-source AI model, MiMo-V2-Flash. This model boasts 309 billion parameters, with 15 billion in active use. Goldman Sachs views this technological development as a potential catalyst for Xiaomi's broader ecosystem, which reported 742 million monthly active mobile users by the end of the third quarter of 2025—an 8.2% year-over-year increase. The ecosystem also includes over one billion connected IoT devices.

Capital Flows and Corporate Action

In a direct response to the stock's weakness, Xiaomi's management authorized a share repurchase on December 18. The company bought back 3.8 million of its B-shares for a total consideration of HKD 150.7 million. While this move is intended to signal management's belief that the stock is undervalued, it was insufficient to reverse the day's losses.

Perhaps more telling was the substantial inflow of "Southbound Capital"—funds from mainland Chinese investors channeled through the Hong Kong Stock Connect scheme. Xiaomi led the market that day, attracting a net inflow of HKD 904 million, the highest of any listed company. This suggests domestic investors may be viewing the price dip as a buying opportunity, even as some international institutions grow more wary.

Product Pipeline and Market Challenges

Looking ahead, CEO Lei Jun confirmed the upcoming launch of the Xiaomi 17 Ultra smartphone next week. This device marks the first flagship model resulting from an expanded partnership with camera specialist Leica. Concurrently, the company is raising prices for its tablet range, a move attributed to increased memory component costs. Xiaomi aims to boost shipments in its high-end device segment to over 15 million units in 2025, up from 13 million the previous year.

The broader market context remains challenging. A general softness in handset-related equities, compounded by a 35% plunge in the shares of electric vehicle maker XPeng, is weighing on sentiment across the Chinese tech sector. Xiaomi's own foray into the EV market exposes it to these sectoral headwinds. The coming week's product launch will be a key test of whether Xiaomi's innovation can bridge the gap between the analysts' opposing views.