Xiaomi’s Twin Cost Squeeze Leaves Stock Languishing Despite Record Buyback

Despite record IoT sales and new smartphone markets, Xiaomi shares near 52-week low as memory-chip costs and EV losses slash Q1 profits 43%. HK$20bn buyback fails to stem decline.

The chasm between Xiaomi’s product demand and its stock market performance has rarely been wider. While the company notches record IoT sales and pushes into new smartphone markets, its shares have sunk to within 2.64% of a 52-week trough of €2.82, closing Friday at €2.89. The culprit is a punishing combination of surging memory-chip costs and losses from its electric-vehicle venture that together have slashed first-quarter profits by 43%.

Xiaomi’s EV division is the most visible drag. Deliveries rose 6.6% year-on-year to 80,856 vehicles in the first quarter, yet the segment posted an operating loss of ¥3.1 billion — roughly $5,600 per car. The annual target of 550,000 vehicles is slipping away: only about 140,000 to 150,000 units were delivered in the first five months, meaning the second half would require monthly runs well above 30,000. April saw a 71.2% month-on-month jump to 36,702 vehicles, but May again fell short of the required pace. Chairman Lei Jun has warned investors that cost pressures will persist for another two years, and Counterpoint Research sees no relief before late 2027.

The profit collapse was triggered by an explosion in memory prices. Global AI infrastructure demand has driven smartphone DRAM costs to five times their previous level and TV memory to ten times. That hammered Xiaomi’s smartphone revenue, which fell 12.5% to ¥44.3 billion in the quarter, while shipments dropped 19% to 33.8 million units — the steepest decline among the world’s top five handset makers. Total first-quarter revenue slid 11% to ¥99.14 billion, and adjusted net income fell to ¥6.07 billion.

Xiaomi’s response has been its largest-ever buyback programme, authorising up to HK$20 billion in repurchases of Class-B shares over 12 months, effective 2 June. On the first day the company bought 10.5 million shares for about HK$298 million. The market remained unimpressed: the stock has lost roughly 36% since the start of 2026 and sits more than 56% below its 52-week high of €6.69. The relative strength index of 32.6 signals technically oversold territory, but Jefferies expects Xiaomi’s smartphone shipments to contract 15% this year, worse than the industry average of 11.6%.

As the EV business burns cash, Xiaomi is doubling down on handset launches in growth markets. June brings three confirmed India releases — the Xiaomi 17T, Redmi Turbo 5 and Redmi 17 5G — with the Turbo 5 featuring a Dimensity 8500 Ultra chipset and a 7,560 mAh battery supporting 100W fast charging. For September, the company plans a China launch of the 18-series based on TSMC’s new 2-nanometre node, though the Ultra variant has been paused due to rising component costs. Meanwhile, Xiaomi has received Chinese regulatory approval to produce range-extender vehicles, with a new SUV sub-brand expected to debut in the second half of 2026. President Lu Weibing anticipates a moderation in cost increases from the third quarter, but for now the buyback has done little to arrest the slide, and the EV delivery trend in the coming months will be the decisive factor for the stock.