Xiaomi’s Grand Ambitions Meet a Profit Shock: Goldman Warns of 50% Earnings Collapse

Xiaomi stock drops 36% YTD to €2.88, near 52-week low, as Goldman Sachs forecasts 50% profit slump in Q2 2026. Despite EV and AI expansion, market demands profitability.

Xiaomi is racing to reinvent itself as a carmaker and AI powerhouse, yet its shares have been punished relentlessly. Since the start of the year, the stock has shed nearly 36% to trade at €2.88, dangerously close to the 52-week low of €2.82. Over the past twelve months, the decline has exceeded 50% — a stark contrast to the company’s aggressive expansion into electric vehicles and smart ecosystems.

The market’s scepticism has been amplified by a stark warning from Goldman Sachs. Analysts at the bank forecast that Xiaomi’s adjusted net profit in the second quarter of 2026 will slump by 50% to 5.4 billion yuan. While overall revenue is expected to edge up just 1% year-on-year, stripping out the electric vehicle and AI segments reveals a 9% contraction in the core business. Despite that dire outlook, Goldman maintained its “Buy” rating, signalling long-term faith in the strategy.

That strategy — branded “Human × Car × Home” — aims to weave together smartphones, wearables, vehicles and home devices into a seamless experience. The first SU7 electric sedan hit Chinese roads in March 2024, and Xiaomi already has the SU7 2026 and the YU7 SUV in the pipeline. A budget-oriented sub-brand called Skynomad will target family SUVs, with a European entry pencilled in for 2027. The company is also retiring its long-standing MIUI interface in August 2026, replacing it with HyperOS 4, a leaner system built on Flutter and Rust that runs AI tools — for photo editing and transcription — directly on the device. A robotic charging arm that plugs in the EV autonomously was also unveiled.

On the financial side, the transformation is burning cash. Xiaomi plans to invest over 16 billion yuan in research and development this year, including a token distribution for AI models that has already allocated 80 of a planned 100 billion tokens. The smartphone business, which still holds a global top-three position, must fund this overhaul, but rising memory chip costs are squeezing margins. Internet services, with their high gross margins, are seen as a stabiliser, yet they are not yet large enough to offset the drag from hardware.

Technically, the stock looks battered. The relative strength index stands at 30.6, just above the oversold threshold. The share price trades 31% below its 200-day moving average, and annualised volatility exceeds 36%. Market capitalisation remains hefty at €91 billion, leaving ample room for further downside if earnings disappoint. The next major test will be the second-quarter report, where a confirmation of the predicted profit collapse could break the support at €2.82.

Goldman’s continued endorsement suggests the bank views the long-term vision as viable. But for now, investors are demanding tangible profits from the EV and AI ventures. Until those segments deliver consistently, the cautious tone on the stock is unlikely to lift.