Xiaomi's Hardware Gamble Meets a Billion-Dollar Bet

Xiaomi’s stock is plumbing one-year lows, but the Chinese tech giant is making moves on multiple fronts to change the narrative. The company is deploying capital to support its share price while launching innovative hardware, even as its core smartphone business faces intense margin pressure.

In a significant show of confidence, Xiaomi’s management executed a major share buyback this week. The company purchased 8.1 million of its own shares for approximately HKD 248 million. This transaction is part of a larger, automated buyback program authorized in January, which has a total capacity of up to HKD 2.5 billion. The buyback comes as the stock trades at a 52-week low of EUR 3.36, having lost roughly 25% of its value since the start of the year.

The pressure on the stock is rooted in the company's financial performance. Xiaomi's adjusted net profit fell 24% year-over-year in the fourth quarter of 2025. The smartphone division, in particular, is grappling with rising costs for components like memory chips. To protect profitability in its home market, where it ranked fifth in Q1, Xiaomi has raised retail prices for select models by as much as 30%.

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Simultaneously, the company is pouring resources into future growth areas. Its annual R&D budget now exceeds CNY 40 billion, with a significant portion dedicated to building out artificial intelligence and robotics capabilities. This strategic pivot is compressing margins in the near term as Xiaomi invests heavily in creating a connected ecosystem.

On the product front, Xiaomi is preparing a unique launch aimed at the gaming community. On April 21, it will introduce the Redmi K90 Max, the first smartphone in its portfolio to feature a built-in cooling fan. The device boasts a 6.83-inch display with a 165Hz refresh rate, supported by over 40 games. According to product manager Hu Xinxin, the 18.1mm fan can lower the device temperature by 10°C—from 48°C to 38°C—in just 100 seconds, and it comes with a six-year warranty. The same launch event will also debut two new tablets and the Redmi Book Pro 2026 laptop, powered by Intel's Core Ultra X7 358H processor. These products are initially confirmed for the Chinese market only.

The company's electric vehicle division delivered a mixed performance in March. Total vehicle deliveries reached 21,440 units, a 5% increase from February but a nearly 27% decline year-over-year. The new SU7 sedan was the bright spot, with 7,882 units delivered in just eight days. However, deliveries of the established YU7 SUV fell by approximately one-third sequentially, a drop attributed to production capacity being temporarily allocated to the SU7 model changeover. The order book for the SU7 has surpassed 40,000 confirmed units. For 2026, Xiaomi maintains an ambitious target of 550,000 vehicle deliveries, up from 411,837 the previous year.

Xiaomi finds itself at a crossroads, balancing costly investments in EVs and AI against immediate profitability challenges in smartphones. The substantial share buyback and the upcoming gaming-focused product launch represent a dual-pronged effort to stabilize investor sentiment and showcase innovation, as the company works to prove its long-term growth story.

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