Xiaomi's Tripled AI Budget and Green Auto Innovation Fail to Reverse Share Price Slide

Xiaomi triples AI GPU budget to over 10B yuan, unveils recycled-aluminum EV alloy, and preps 8,000mAh phone battery, yet shares fall 42% YTD amid margin pressure.

The gap between Xiaomi's operational ambitions and its stock-market performance continues to widen. While the company pours billions into artificial-intelligence infrastructure and unveils breakthrough environmental technology for its electric vehicles, its shares languish nearly 42% lower year to date and more than 60% below a September 2025 peak. Monday saw the stock slip another 2.25% to €2.59, extending a decline that has left the 52-week low of €2.34 just 12% away.

At the heart of the AI push is a dramatically expanded commitment to cloud computing partner Kingsoft Cloud. Xiaomi has tripled its GPU budget from roughly 4 billion yuan to over 10 billion yuan, responding to computational demand that has grown faster than anticipated. The partnership goes well beyond leasing graphics cards: sources indicate Kingsoft Cloud could purchase more than 40 billion yuan of AI hardware directly from Xiaomi, with total procurement over the next two years possibly exceeding 100 billion yuan. Kingsoft Cloud itself is raising its 2026 investment plan to 15 billion yuan, targeting revenue of 12.5–13.5 billion yuan.

The AI splurge is part of a previously announced three-year, 60-billion-yuan strategy to embed artificial intelligence deeply across smartphones, smart-home devices, and electric vehicles. Xiaomi aims to reposition itself as a technology company beyond traditional hardware margins. But the payoff remains distant. Funds flow into data centres and infrastructure rather than immediately profitable segments, while the core smartphone business faces headwinds from elevated memory-chip costs. That tension — long-term AI bets versus short-term margin pressure — helps explain the stock's 30-day volatility of roughly 33%.

Meanwhile, Xiaomi’s auto division is making environmental headlines. The company today revealed details of “Titan Alloy 2.0”, a body-structure alloy made entirely from recycled aluminium. Used for large rear structural components, the new material cuts the carbon footprint of those parts by 93%, saving about 800 kilograms of greenhouse gases per vehicle. That could prove strategically valuable for exports to Europe, where the EU's Carbon Border Adjustment Mechanism penalises carbon-intensive production.

On the smartphone front, leaks point to another technological leap. The upcoming Xiaomi 18 Pro Max is expected to carry a silicon–carbon battery exceeding 8,000 milliampere-hours — nearly double current standards — paired with a high-efficiency 2-nanometre processor and a dual Leica camera. A China launch is slated for autumn 2026.

Yet the EV market remains brutal. A fierce price war in China and fast-growing Chinese imports into Europe force Xiaomi to compete against established rivals like BYD. In May the company sold nearly 33,000 electric vehicles — solid operational output — but that has done little to alter the stock’s trajectory. The shares trade roughly 14% below the 50-day moving average of €3.05 and nearly 34% below the 200-day average of €3.95. The relative strength index of 39 has exited oversold territory but offers no clear buy signal.

Investors are left waiting for the next quarterly results to gauge how severely rising infrastructure costs and memory-chip inflation are squeezing margins. For now, Xiaomi’s biggest bets — on AI firepower and green manufacturing — are being priced as distant promises rather than near-term catalysts.