Xiaomi’s Two-Front War: AI Ambition and Auto Expansion as the Stock Sinks

Xiaomi unveils $28B R&D plan for AI and EVs, but shares hit 52-week low as smartphone margins shrink and EV production lags targets.

The disconnect between corporate strategy and market sentiment at Xiaomi has rarely been starker. At its annual Investor Day in Beijing on April 27, the company laid out an aggressive roadmap spanning artificial intelligence, electric vehicles, and smartphones — only to watch its shares tumble to a fresh 52-week low of €3.29, extending year-to-date losses to nearly 27%.

A $28 Billion R&D Bet on AI

Xiaomi is putting serious money behind its technology ambitions. The company plans to invest 200 billion yuan in research and development through 2030, with more than 60 billion yuan earmarked exclusively for AI projects over the next three years. For 2026 alone, the R&D budget already surpasses 40 billion yuan.

The centerpiece of this push is MiMo-V2.5-Pro, Xiaomi’s proprietary large language model, which ranks first among global open-source models on the Artificial Analysis Intelligence Index. The company is exploring multiple monetization routes, including hardware surcharges, subscription tiers, and token-based systems. Early signs are promising: 35% of users testing token plans have converted to paying customers.

Smartphone Squeeze and an Early Launch

The core handset business faces mounting headwinds. Component costs have surged fivefold since early 2025, with memory chip prices jumping as much as 90% in the first quarter alone. The impact was brutal — gross profit in the smartphone segment collapsed by more than 40% in the fourth quarter of 2025.

Xiaomi’s response is a strategy of higher prices and lower volumes. The company shipped roughly 13.35 million premium smartphones in 2025, a 24% year-on-year increase, but management expects the overall market to shrink by at least 10% in 2026. The bet is that rising average selling prices can offset the volume decline.

In a surprise move, Xiaomi is accelerating its product cycle. The Xiaomi 17T and 17T Pro are now slated for a second-quarter 2026 launch — roughly four months earlier than the traditional September window for the T-series.

Europe Beckons, but EV Production Lags

The electric vehicle division delivered a sluggish start to 2026, handing over roughly 79,000 units in the first quarter — less than half the 145,000-plus vehicles delivered in the final three months of 2025. To hit the full-year target of 550,000 deliveries, Xiaomi needs to average more than 52,000 vehicles per month for the remainder of the year.

The SU7 model has accumulated more than 63,000 confirmed orders, but production ramp-up remains the bottleneck. Management provided concrete timelines for international expansion: the European market entry is set for the second half of 2027, with right-hand-drive markets following in early 2028. A research and design center opened in Munich last September, staffed by over 100 engineers, will serve as the launchpad.

Buybacks Fail to Stem the Slide

Xiaomi has been aggressively buying back its own stock, spending 7.4 billion Hong Kong dollars through the end of April — more than in all of 2025. The company purchased approximately 200 million Hong Kong dollars’ worth of shares in the past two trading sessions alone. Yet the buyback blitz has done little to arrest the decline.

The board is also pushing for governance reforms. Proposed changes to the company’s articles of association, including provisions for virtual shareholder meetings and enhanced investor protections, will be put to a vote at the annual general meeting on June 2, 2026.

The next major catalyst comes in May, when the board meets to approve first-quarter 2026 results. By then, investors will have a clearer picture of whether Xiaomi’s grand ambitions can compensate for the mounting pressure on its core business.