Xiaomi's Buyback Blitz Masks the Real Question Hanging Over Its EV Ambitions

Xiaomi's stock rebounds 11% despite Q2 miss, as buybacks hit HKD 11.7B and EV margins hold, but 550K delivery target faces steep climb.

The stock has clawed back 11 percent in a week, closing Friday at EUR 3.16 with a 3.9 percent daily gain. On the surface, that looks like a vote of confidence. But the more telling number sits in the company's capital-returns program: Xiaomi has already spent roughly HKD 11.7 billion on share repurchases in 2026, surpassing its entire buyback volume for the prior year. Management is putting money where its mouth is on valuation — even as the market waits to see whether the electric-vehicle division can deliver on a promise that keeps getting harder to keep.

A Milestone Reached, a Target Stretched

The SU7 sedan crossed 500,000 cumulative deliveries on Monday, a figure reached over 28.5 months since launch. That is a genuine production achievement, evidence that the assembly lines are running at meaningful scale. Yet July's monthly figure of 31,267 vehicles tells a more complicated story — it came in below the prior month, a sequential dip that chips away at the narrative of an uninterrupted ramp.

The official 2026 target remains 550,000 units. To hit it, Xiaomi would need to average roughly 67,000 deliveries per month for the rest of the year — more than double July's pace. That gap is the crux of the tension: the milestone is real, but the math required to close out the year is steep.

Guosen Securities nonetheless sees the EV arm posting a 20 percent gross margin for full-year 2026, building on the 19.2 percent margin reported in the vehicle business. The firm's case rests on an improving product mix and economies of scale — a view that treats the current margin trajectory as a floor, not a ceiling.

The Memory-Chip Squeeze That Won't Let Go

Tuesday's quarterly report laid the pressure bare. Revenue came in at CNY 108.9 billion against a consensus of CNY 112.2 billion, while adjusted net profit landed at CNY 6.2 billion — a figure that marked a sharp decline. Reuters framed the miss as evidence that memory-chip pricing is compressing margins in the smartphone segment, though it also signaled the pressure could ease in the second half.

That nuance matters. The stock has risen 13.4 percent since the earnings release, a move that looks counterintuitive until you factor in investor expectations: the market appears to be betting that the worst of the input-cost pain is behind the company, even if the actual numbers missed the mark.

The buyback program reinforces that read. Combined with the board's Wednesday approval of 41.8 million shares to 1,652 employees under the "2023 Share Scheme" at a reference price of HKD 27.44, the message is one of internal conviction — both in the balance sheet and in the people tasked with executing the EV push.

New Models, New Markets

September brings a broader test of that confidence. Xiaomi is set to launch the "Pengcheng" series and the "SkyNomad" SUV with extended-range electric vehicle (EREV) technology, both designed to widen a portfolio that has leaned heavily on the SU7 sedan. The same month, the company will present its "Human x Car x Home" ecosystem at IFA in Berlin and begin expanding into large home appliances across Europe — a signal that the ecosystem play is meant to travel well beyond smartphones and cars.

The international ambitions are clear. The execution risk is equally clear, and the stock's behavior reflects it: annualized 30-day volatility sits at 61 percent, a figure that underscores just how much the market is pricing in uncertainty rather than certainty.

The Distance Still to Travel

For all the recent gains, the share remains 27 percent below where it started the year. The 52-week high of EUR 6.54, set on September 25 last year, is still 52 percent away — a reminder that the recovery, such as it is, has a long way to go before it reclaims prior valuation levels.

German-language market commentary has framed the Q2 picture as a margin drag across both business segments, with the cost burden adding to the pressure. The question that will define the next phase is whether the EV division can scale profitably enough to offset a smartphone business still fighting a chip-price war. The 500,000-unit milestone says demand exists. July's delivery dip says the ramp is not linear. And the buyback says management believes in the story — the market, for now, is still weighing the evidence.