Xiaomi’s Buyback Blitz and European EV Pivot: A Stock at Odds With Its Ambitions

Xiaomi spends $7.4B HKD on buybacks to signal undervaluation, but shares near 52-week low amid EV production slowdown and surging memory chip costs.

Xiaomi is spending heavily to convince the market it is undervalued. The Chinese tech giant has splashed out 7.4 billion Hong Kong dollars on share buybacks since the start of the year, already exceeding the 6.3 billion HKD it spent in all of 2025. The message from management is unmistakable: they believe the stock is too cheap.

The market is not so sure. Xiaomi’s shares have nearly halved from their 52-week high of €6.69 and now trade close to their lowest point in a year. The disconnect between the company’s operational momentum and its stock price is widening by the day.

A New CTO and a European Roadmap

On the automotive front, Xiaomi is doubling down. At the Beijing Auto Show, the company showcased its full electric vehicle lineup and reported 60,000 firm orders for the SU7 sedan. CEO Lei Jun confirmed on April 23 that 26,000 units of the new model had already been delivered.

To steer this expansion, Xiaomi made two key hires on April 17. Hu Zhengnan was appointed group vice president and the first-ever CTO of the automotive division — a role that did not exist since the unit was founded in 2021. Hu brings nearly three decades of experience, having led development of Geely’s Boyue SUV and its SEA electric architecture, and later advised Shunwei Capital during early SU7 development. Separately, Song Gang, a former Tesla factory director, was named vice president and chief of staff for the auto unit.

The company’s European ambitions are now taking shape. Xiaomi plans to enter the European EV market in the second half of 2027, followed by right-hand-drive markets in early 2028. A research and design center in Munich will tailor models to European tastes. The strategy is deliberately focused on the premium segment.

The Production Challenge

Xiaomi’s delivery numbers tell a more sobering story. In the first quarter of 2026, the company handed over roughly 79,000 vehicles — a sharp drop from the more than 145,000 units delivered in the final quarter of 2025. To hit its full-year target of 550,000 deliveries, Xiaomi now needs to average over 52,000 units per month for the rest of the year.

Demand in China continues to outstrip capacity at the Beijing plant. Since production began roughly two years ago, cumulative deliveries have reached around 650,000 units. The company is sticking with its 2026 target of 550,000 vehicle deliveries, but the sequential decline in Q1 puts that goal under serious pressure.

Smartphone Margins Under Siege

The EV business is not the only drag on investor sentiment. Xiaomi’s core smartphone operation is facing a brutal cost squeeze. Prices for mobile memory chips surged as much as 90 percent in the first quarter, hitting entry-level devices particularly hard. In the fourth quarter of 2025, gross profit in the smartphone segment collapsed by more than 40 percent, dragging group profit down over 27 percent year-on-year.

Xiaomi is pursuing a dual strategy to defend its target segment margin of 8 percent, though concrete details remain scarce. The board will meet on May 26 (or May 27, depending on the reporting date) to approve first-quarter results. Investors will be watching two metrics closely: how much rising chip and logistics costs have eroded smartphone margins, and whether the EV unit managed to start the year profitably.

AI as a Second Revenue Stream

Beyond cars and phones, Xiaomi is pushing into artificial intelligence services. Currently, 35 percent of users are converting to paid subscribers for token-based AI subscriptions. The goal is to reduce dependence on pure hardware sales.

The investment commitments are long-term and substantial: 200 billion yuan over five years for research and development, with over 60 billion yuan allocated to AI infrastructure within three years. The vision is a closed ecosystem of smartphones, vehicles, and smart-home devices built on the HyperOS platform.

For now, however, the market remains fixated on the near-term headwinds. The sequential delivery drop in the EV unit is the central argument investors wield against any re-rating of the stock. Until the Q1 numbers show whether the growth strategy is translating into profits, the buyback blitz may struggle to close the gap between Xiaomi’s ambitions and its share price.