Xiaomi Piles on Premium Hardware and Buybacks, Yet the Stock Keeps Sliding

Xiaomi shares plunge 27% YTD as smartphone gross profit collapses 40%, despite premium pivot and aggressive buybacks. EV expansion delayed to 2027.

The disconnect between Xiaomi’s ambitions and its stock price has rarely been wider. While the company maps out a future packed with 200-megapixel cameras, 7,000 mAh batteries, and a European EV launch, its shares have tumbled to a new 52-week low — hitting €3.28 before a marginal bounce to €3.29. The year-to-date decline stands at 27%, and the stock now trades 29% below its 200-day moving average.

The Cost Squeeze Bites Harder

The root cause of the market’s pessimism is a brutal margin squeeze in Xiaomi’s core smartphone business. Component costs have quintupled since the start of 2025, with memory chip prices alone surging up to 90% in the first quarter. The damage was immediate: smartphone gross profit collapsed by more than 40%.

First-quarter 2026 shipments fell to 33.8 million units, a 19% year-on-year decline — the steepest drop among the world’s top five handset makers. JPMorgan sees little relief ahead, forecasting smartphone gross margins will remain stuck in the high single digits through 2027.

The fourth quarter of 2025 already offered a warning shot: gross margin in the handset division slid to 8.3%, while global deliveries slipped to just under 38 million units.

A Premium Pivot and an Accelerated Product Cycle

Xiaomi’s answer to the volume crunch is to sell fewer phones but at higher prices. The strategy showed some traction last year, with premium smartphone shipments reaching 13.35 million units — up 24%. In mainland China, the share of high-end devices in total sales hit a record 27.1%.

The product roadmap is accelerating to match. The 17T and 17T Pro are now expected to launch in the second quarter of 2026, roughly four months earlier than the usual September window. Leaks from the well-known tipster Digital Chat Station point to an even more aggressive 18-series lineup, featuring a compact 6.3-inch flat display, a dual 200-megapixel camera system with a 50-megapixel ultrawide, and a battery capacity approaching 7,000 mAh. A new 2-nanometer chip architecture is also reportedly in the works.

Buybacks Fail to Stem the Tide

Management has tried to support the stock with a hefty buyback program, spending 7.4 billion Hong Kong dollars on its own shares through April 24 — more than in all of 2025. The effort has so far failed to arrest the slide.

EV Expansion on a Delayed Horizon

On the electric vehicle front, Xiaomi has delivered a cumulative 655,000 cars over the past 24 months. The 2026 target stands at 550,000 units, representing 34% growth year-on-year. European market entry is penciled in for the second half of 2027.

The Next Test

The board is set to approve first-quarter 2026 results in May. Those numbers will provide the clearest picture yet of whether the premium push can offset the damage from the memory chip cycle — or whether the market’s skepticism is justified.