Xiaomi's Market Paradox: Record Profits Amidst Share Price Decline

Xiaomi's 2025 report shows record revenue & profit, but shares hit a low. Growth is driven by a successful EV pivot and major AI investments, countered by market pessimism.

Xiaomi's latest annual report for 2025 presents a striking contradiction for investors. The company posted historic highs in both revenue and profit, yet its shares have simultaneously slumped to a yearly low. This divergence highlights a significant disconnect between the firm's operational performance and its current market valuation.

Financial Performance Hits New Peaks

The Chinese technology giant reported total revenue of 457.3 billion yuan, marking a substantial 25 percent increase compared to the previous year. Even more impressive was the surge in adjusted net profit, which jumped 43.8 percent to reach 39.2 billion yuan. Both figures represent all-time records for the company.

A Strategic Pivot Beyond Smartphones

A deeper analysis reveals a fundamental shift in Xiaomi's business model. As recently as 2024, smartphones and AIoT (Artificial Intelligence of Things) products accounted for a dominant 91 percent of total revenue. That share has now decreased to 76.8 percent over the past twelve months—a notable 14 percentage point decline.

This rebalancing is primarily driven by the explosive growth of the electric vehicle (EV) division. The automotive segment alone generated 103.3 billion yuan in revenue and, for the first time, achieved a positive operating result. Looking ahead, Xiaomi has set an ambitious target of 550,000 vehicle deliveries for 2026, which would represent a 34 percent year-over-year increase. Strong consumer demand was evident during the launch of the updated SU7 model for 2026, which garnered 15,000 reservations within just 34 minutes.

Aggressive Investments in Future Technologies

Concurrently, Xiaomi is making a major push into generative artificial intelligence. On March 19, the company launched three new models within its MiMo-V2 family, designed for applications in agent systems, robotics, and language processing. Its flagship model, MiMo-V2-Pro, currently holds eighth place on the Artificial Analysis Intelligence Index, ranking it as the second-best Chinese language model available. Xiaomi has committed to investing 60 billion yuan in AI research and development over the coming three years, with 16 billion yuan allocated for 2026 alone.

The integration of these technologies is already underway. At its own EV manufacturing plant, Xiaomi's proprietary humanoid robot recently completed a three-hour autonomous shift at an assembly station, successfully performing its tasks with a 90.2 percent success rate.

Share Buybacks Combat Market Pessimism

Despite this robust operational performance, investor sentiment remains subdued. Xiaomi's share price has declined approximately 19 percent since the start of the year and is down more than 41 percent over a twelve-month period. In response, the company's management has initiated an aggressive share repurchase program. Last month, over 3.2 billion Hong Kong dollars were deployed to buy back shares—the highest monthly expenditure in more than two years. The company has been repurchasing its own stock on nearly every trading day so far this year.

Whether this capital allocation strategy can catalyze a reversal in the stock's fortune ultimately depends on the market's perception. Investors need to begin pricing in the company's successful structural transformation into a diversified tech platform, rather than focusing solely on the macroeconomic risks associated with Chinese growth stocks in a challenging global environment.