Xiaomi's Strategic Pivot: Heavy AI and Robotics Investment Amid Market Challenges

Xiaomi posts record 2025 revenue and profit, but shares fall 20% as it invests 16B yuan in AI and targets 550k EV deliveries for 2026.

Xiaomi is channeling substantial resources into artificial intelligence and robotics, a strategic shift underscored by concrete financial targets and recent technological demonstrations. Despite posting record annual revenue, the company's shares have faced significant downward pressure this year.

Financial Performance and Strategic Spending

The Chinese technology conglomerate closed its 2025 fiscal year with record revenue of 457.3 billion yuan. Its adjusted net profit saw a substantial increase of 43.8%, reaching 39.2 billion yuan. A notable milestone was achieved by its Electric Vehicle (EV) and AI division, which reported its first positive operating profit of 900 million yuan on revenue of 106.1 billion yuan.

Driving this transformation is a formidable investment plan. Xiaomi has allocated 16 billion yuan specifically for AI investments in 2026, with cumulative spending in this area projected to hit 60 billion yuan by 2028. Furthermore, the company's total research and development expenditure is expected to surpass the 40-billion-yuan threshold for the first time in 2026.

Technological Ambitions: From Robotics to AI Models

A key component of this strategy is "embodied AI," integrating software intelligence into a unified ecosystem encompassing human, automotive, and home applications. CEO Lei Jun recently showcased advances in robotic hands, which have successfully completed 150,000 gripping cycles in reliability tests.

The effort is powered by Xiaomi's proprietary MiMo-V2-Pro AI model. The system boasts over one trillion total parameters, with 42 billion actively utilized. Its competitive standing was highlighted when it ranked among the top five most-used AI models globally in the week leading up to March 22, according to OpenRouter data. It also holds the eighth position in the Artificial-Analysis ranking, indicating strong but not leading performance.

Electric Vehicle Targets and Market Pressures

The EV business forms a central pillar of Xiaomi's growth strategy. The company launched its new SU7 model generation on March 19, with a starting price of 219,900 yuan. It has set an ambitious delivery target of 550,000 vehicles for 2026.

However, the company is navigating headwinds. Rising prices for DRAM and NAND memory chips are exerting noticeable pressure on gross margins within its hardware segment. Despite this, Xiaomi maintained its position as China's second-largest smartphone vendor with a 16.6% market share, bolstered by a successful push into the premium segment. In 2025, smartphones priced above 3,000 yuan accounted for 27.1% of its sales volume in China.

Share Performance and Management Signal

The market has yet to reward this expansive strategic vision. Since the start of the year, Xiaomi's stock has declined by approximately 20%. It currently trades at 3.59 euros, significantly below its 200-day moving average of 4.93 euros.

In a move interpreted as a confidence signal from management, the company repurchased 2.2 million of its own shares for about 71.4 million Hong Kong dollars on Friday. This buyback activity has, so far, failed to reverse the negative sentiment surrounding the equity.