Xiaomi’s $16B AI Push and SkyNomad SUV Signal Dual Growth Bet as Quarterly Profit Tumbles 43%

Xiaomi stock surges 13% as market focuses on new SkyNomad EREV SUV and $16B AI plan, ignoring a 43% net profit drop and 10.9% revenue decline.

Xiaomi investors are juggling two conflicting narratives this month. The stock has surged more than 13% in the past week, brushing off a steep 43% drop in core net profit, as the market focuses on a fresh product offensive and a massive artificial intelligence investment plan. The Beijing-based technology group unveiled its SkyNomad extended-range SUV family just days after reporting first-quarter earnings that showed revenue falling 10.9% to 99.14 billion yuan and adjusted net income sliding to 6.07 billion yuan.

The SkyNomad N90, a three-row SUV with a total range exceeding 1,500 kilometers, marks Xiaomi’s first foray into extended-range electric vehicles (EREVs). Unlike a conventional hybrid, a 1.5-liter turbocharged engine from Harbin Dongan acts purely as a generator to recharge the battery, which holds between 70 and 80 kWh and delivers 400–500 kilometers of all-electric range. A second model, the N90 Max, plus a camping edition and two smaller N70 variants, have already been confirmed by China’s Ministry of Industry and Information Technology. Pricing starts at around $29,420, undercutting rivals such as Li Auto’s L9 and the Aito M9, both of which are priced above 250,000 yuan.

That aggressive positioning comes at a tricky moment for the EREV segment. Sales of extended-range vehicles in China fell 25%–28% year-on-year in May 2026, and their market share shrank to 7% as battery-electric models now routinely offer 600–700 km of range, eroding the EREV’s traditional advantage. Despite the headwind, Xiaomi is betting the SkyNomad can help bridge a widening delivery gap. The company aims to hand over 550,000 vehicles in 2026, a 34% increase from 2025, but only 185,055 units were dispatched in the first half — barely a third of the target. Deliveries of the SkyNomad are expected to begin in the second half of 2026, likely from August or in the third quarter.

While the auto division provides a growth narrative, the core smartphone-and-IoT business is feeling the pinch from rising memory-chip costs. Xiaomi’s cash pile of more than 220 billion yuan offers a cushion, and management is channeling that firepower into a sweeping AI offensive. At least 16 billion yuan will be spent on artificial intelligence in 2026 alone, with more than 60 billion yuan earmarked over three years. The strategy revolves around the “Human-Car-Home” ecosystem, with over 1 billion devices already running on Xiaomi’s HyperOS. Two new pillars — the miclaw AI agent and an autonomous-driving architecture called XLA — are central to the plan.

Analysts see potential in the long-term AI bet. Morgan Stanley names Xiaomi a top winner in China’s AI household-appliance market, which it expects to grow from $123 billion to roughly $150 billion by 2030, potentially pushing Xiaomi’s domestic revenue beyond 200 billion yuan by 2035. Goldman Sachs has also recently singled out Xiaomi for favorable sector comparisons. Both banks maintain constructive ratings, even as near-term chip costs pressure margins.

To support the share price amid the earnings shock, Xiaomi launched a buyback program in June 2026 worth up to 20 billion Hong Kong dollars, valid for one year. The stock closed Friday at €2.95, up 13.09% over seven days and well above its 52-week low of €2.34 touched on June 26. Yet the year-to-date loss still stands at 34.31%, and the shares remain 55% below the 52-week high of €6.51 from September 2025. With a market capitalization of €74.81 billion and a relative strength index of 60.6, the stock shows no signs of euphoria. For the rally to hold, Xiaomi must prove that its SkyNomad can carve out a niche in a shrinking segment while AI investments begin to pay off — a tall order for a company that just saw its quarterly profit evaporate by more than two-fifths.