Xiaomi’s AI Triumph and a Smartphone Revival Can’t Stop the Bleeding

Xiaomi unveils a trillion-parameter AI model with free commercial use, but investors focus on a 19% smartphone slump, soaring chip costs, and a 28% stock drop.

Xiaomi has just pulled off a technical feat that would make most rivals envious, yet the market is barely batting an eyelid. The company’s new AI language model, the MiMo-V2.5 Pro, launched on April 28 with over a trillion parameters and an open MIT license that lets developers use it for free, even commercially. Early benchmarks show it outperforming rivals like Kimi K2.6, while running far more efficiently than comparable systems from Google or Anthropic. Heavyweights AMD and Amazon Web Services have already signed on as launch partners.

That should be a headline-grabbing moment. Instead, investors are fixated on the rot spreading through Xiaomi’s core business. Smartphone shipments collapsed 19% in the first quarter, according to Counterpoint Research, a steeper decline than either Apple or Samsung suffered. Xiaomi still clings to third place globally, but the slide is accelerating. The culprit is soaring component costs — mobile memory chip prices have surged as much as 90%, crushing margins on the low-end devices that are Xiaomi’s bread and butter.

The stock has taken a beating, losing nearly 28% since the start of 2026 and hitting a fresh 12-month low in late April. Management has been scrambling to prop it up, pouring 7.4 billion Hong Kong dollars into buybacks since January — already more than the entire repurchase program for last year. That’s a staggering sum, but it hasn’t been enough to shift the mood. A smaller buyback tranche of around 200 million Hong Kong dollars was also executed recently, but the market remains unimpressed.

A Flagship Returns from the Dead

Amid the gloom, Xiaomi is quietly preparing a comeback for one of its most iconic smartphone lines. The MIX 5, which has been dormant for four years, is now confirmed for a global launch — a strategic reversal from the MIX 4, which was locked to China in 2021. Internal code names and model numbers spotted in the Mi-Code repository point to a device with an upgraded under-display camera, magnetic lenses for focus control, and the Snapdragon 8 Elite Gen 6 Pro running HyperOS 4.

The under-display camera technology has reportedly crossed the quality threshold for mass production, solving the graininess that plagued earlier versions. Mass production of the magnetic lens components began in February 2026, suggesting a launch window toward the end of the year. A concrete date has not been confirmed, but the global rollout plan — covering India and Europe — signals a major push.

The Auto Business Hits a Speed Bump

Xiaomi’s electric vehicle venture, which had been a bright spot, is also showing cracks. The company delivered roughly 79,000 cars in the first quarter, down sharply from over 145,000 units at the end of last year. To hit the full-year target of 550,000 vehicles, the pace will need to accelerate dramatically. That’s a tall order, and the market is watching closely.

What’s Next

All eyes are now on May 26, when the board will review and approve the unaudited first-quarter results. That report will lay bare the impact of rising memory chip costs on profit margins and reveal whether the AI push or the MIX 5 revival can offset the damage. On June 2, the annual general meeting in Beijing will put the audited 2025 financials to a shareholder vote.

In the meantime, Xiaomi is also rolling out the Smart Band 10 Pro in May, a fitness tracker with a dual-band GNSS chip that supports five satellite systems — a meaningful upgrade. But product launches alone won’t turn the tide. The market wants numbers, and the bar, after that 28% rout, is set painfully low.