Xiaomi Corp. (1810.HK) Earnings Review: 4Q25 Inline; AI Upside via Ecosystem and Embodied AI; Buy
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Goldman Sachs maintains a Buy rating on Xiaomi Corp. (1810.HK) with a 12-month target price of HK$41, implying 25.5% upside. In 4Q25, revenue grew 7% year-on-year, slightly exceeding estimates, while adjusted net profit declined 24%, meeting consensus.
Goldman projects 2026 core profit—comprising internet services, AIoT, and other revenues—at RMB 33.6 billion, representing 110% of the group's estimated 2026 adjusted net profit of RMB 30.2 billion. This provides a substantial earnings buffer against fluctuations in the smartphone and EV segments. The smartphone business is expected to report a net loss exceeding RMB 4 billion in 2026 on approximately 145 million unit shipments. Conversely, the EV business is projected to deliver 600,000 vehicles with a 21.8% gross margin.
Management plans to invest RMB 60 billion in AI over three years, including RMB 16 billion in 2026. This investment aims to create long-term value through ecosystem integration and embodied AI applications, such as autonomous driving and humanoid robotics. Rising memory costs impacted the 4Q25 smartphone gross margin, but proactive inventory management and provisions should mitigate 2026 pressures. The new SU7 EV refresh secured 30,000 confirmed orders in three days, highlighting strong demand. IoT revenue is expected to recover by 3Q26, driven by domestic premiumization and overseas expansion. Goldman reduced its 2026-28 revenue forecasts by 1-2% but maintains its SOTP valuation.