Xiaomi's August Reckoning: A Memory-Chip Squeeze Overshadows the SkyNomad Surge

Xiaomi's EV momentum masks a 43% profit plunge from memory-chip costs. Q2 results on Aug 18 will decide if margins recover or slide further.

The numbers coming out of Xiaomi's product pipeline read like a growth story. The numbers on its share price tell a very different tale — and the gap between the two has never been wider.

On Wednesday, the stock traded at €3.04, down 2.86% on the day, with a seven-day slide of 14.71%. The 12-month picture is starker still: the equity has shed 48.73% of its value, and at its current level sits 53.47% below the 52-week high of €6.54. A market capitalization of €82.25 billion reflects just how far the company has fallen from grace in the eyes of investors.

The EV Machine Keeps Rolling

None of that weakness is visible in the order books. Xiaomi's new SkyNomad SUV line — comprising the N70 and N90 models — is closing in on 100,000 pre-orders, according to reports from August 5. The Beijing-Tianjin region alone accounts for more than 30,000 reservations. On August 2, a single day brought in 4,800 deposits.

The September sales launch can't come soon enough for a company targeting 550,000 vehicle deliveries this year. The offensive is already reshaping the competitive landscape in China, where German premium brands are bleeding market share — Mercedes down 27% and BMW off 20% in the first half. Xiaomi is stepping into precisely the void those retreats have opened.

The EV momentum isn't new. The SU7 series has now delivered more than 30,000 vehicles for four consecutive months through July 2026, though management has acknowledged persistent production bottlenecks that could cap upside if demand keeps accelerating faster than factory output.

The Margin Problem Nobody's Talking About

Yet the auto division's success masks a more troubling dynamic in the core business. The global memory-chip cycle is squeezing Xiaomi's smartphone and electronics margins hard. First-quarter 2026 revenue climbed to 99.1 billion renminbi, but adjusted net profit collapsed 43.1% to 6.1 billion renminbi, with rising DRAM prices cited as the primary culprit.

That's the backdrop for August 18, when Xiaomi reports second-quarter results. The critical question isn't whether EV deliveries impressed — those numbers are already known. It's whether the DRAM cycle has peaked or continues to erode profitability. If memory prices stay elevated, another double-digit profit decline could be on the cards despite revenue growth. If they ease, the margin recovery could finally give the stock a reason to turn around.

Beyond the Balance Sheet

Xiaomi's artificial intelligence ambitions add another layer to the story. The MiMo-V2.5 model has processed 5.1 trillion tokens, ranking second globally in usage — ahead of OpenAI. The August security patch rollout for devices like the 15S Pro and Pad 7 Ultra underscores the operational cadence. This is no longer just a smartphone maker; it's a diversified technology conglomerate.

Management has also signaled conviction through capital allocation. In May, the board authorized a HK$20 billion share buyback program with a 12-month runway. Founder Lei Jun added his own vote of confidence in November 2025, purchasing HK$100 million worth of shares at an average price of HK$38.58 each.

The Bear Case Has Teeth

The risks are equally concrete. The technical picture remains fragile: the stock trades 17.69% below its 200-day moving average, and the 30-day volatility reading of 57.03% suggests investors are braced for more turbulence. The RSI of 49.9 puts the stock in neutral territory — no oversold bounce signal yet.

Then there's the unresolved legal dispute in India. Xiaomi is contesting a customs demand on license fees totaling $72 million, which could balloon to $150 million with interest. An adverse ruling would hit not just the balance sheet but confidence in the company's international expansion.

A Two-Front Battle

The divergence between operational strength and market valuation is striking. In any other context, a company with Xiaomi's EV order flow and AI traction might be commanding a premium. Instead, it's down 29.68% year-to-date and trading at levels that suggest deep skepticism about the broader Chinese market rather than the company's execution.

The August 18 earnings release will provide the first hard evidence of whether the chip cycle has turned. Until then, the stock remains a test of nerve — a holding that rewards patience when the product lines are firing, but punishes it mercilessly when the macro and margin headwinds blow. For now, Xiaomi's two engines are pulling in opposite directions, and the market is waiting to see which one wins.