On March 24, 2026, Xiaomi Corporation unveiled an impressive financial report: full-year 2025 revenue reached 457.3 billion yuan, a 25% year-on-year increase, while adjusted net profit surged 43.8% to 39.2 billion yuan, setting new historical highs for both core financial metrics. However, just two weeks prior to this strong earnings release, Goldman Sachs issued an in-depth research report lowering Xiaomi's target price from HK$47.5 to HK$41 and significantly reducing its profit forecasts for 2026-2027. This conflicting signal raises the question: Is Goldman Sachs being overly cautious, or does Xiaomi face genuine headwinds?

In its March 9, 2026 report, Goldman Sachs explicitly highlighted that Xiaomi is confronting dual pressures from rising upstream costs in both the consumer electronics and automotive industries. Specific data indicated that LPDDR4X memory prices increased by 60% over three months, while NAND flash memory prices rose between 30% and 50%. For a company simultaneously selling smartphones and manufacturing vehicles, this translates to an additional cost of 100 to 200 yuan per phone and 4,500 yuan per car. Based on this assessment, Goldman Sachs further reduced its 2026-2027 revenue forecasts for Xiaomi by 8-9% and its adjusted net profit forecasts by 19-23%. The report projected that Xiaomi's smartphone business would incur an approximate loss of 4.1 billion yuan in 2026, with smartphone gross margin declining from 10.9% in 2025 to 8.0% in 2026.

Despite these concerns, Xiaomi's actual 2025 performance demonstrated robust profit resilience. The financial report revealed that revenue from innovative business segments, including smart electric vehicles and AI, surpassed the 100-billion-yuan threshold for the first time, reaching 106.1 billion yuan—a 223.8% year-on-year increase—and achieving a positive annual operating profit of 900 million yuan. In the fourth quarter alone, segment revenue amounted to 37.2 billion yuan, accounting for 32% of the group's total revenue, indicating a gradual convergence with the smartphone business in terms of revenue structure. More critically, Xiaomi's profit composition validated Goldman Sachs' "backbone profit" theory. In 2025, internet services revenue grew 9.7% to 37.4 billion yuan, with a gross margin of 76.5%; revenue from IoT and lifestyle consumer products increased 18.3% to 123.2 billion yuan, with gross margin rising to 23.1%. These high-margin businesses form a solid profit cushion.

Goldman Sachs' report particularly emphasized Xiaomi's strategic positioning in physical AI, considering it crucial to the company's long-term value. The 2025 financial report showed that R&D expenditure reached 33.1 billion yuan, a 37.8% year-on-year increase, approaching the scale of the full-year net profit. Xiaomi's investments in AI are already yielding results: the MiMo-V2-Flash model, released in late 2025, ranked third on OpenRouter by token processing volume; the first-generation robotics VLA model, Xiaomi-Robotics-0, open-sourced in 2026, achieved state-of-the-art levels in major benchmark tests. More notably, Xiaomi's humanoid robot has been trialed on an actual automotive production line—specifically at a self-tapping screw installation station—with a production cycle of 76 seconds.

The Goldman Sachs report pointed out that Xiaomi possesses 176 billion yuan in net cash and an 86 billion yuan book value from invested companies, equivalent to approximately HK$10.5 per share, nearing one-third of the current stock price. This provides a substantial safety net for the share price. Goldman's bear case valuation is HK$27.5 (18% downside), while its bull case is HK$47 (41% upside). From a valuation perspective, Goldman Sachs believes that as the market gradually recognizes Xiaomi's delivery capabilities in physical AI—boasting self-developed AI large models, operating systems, and chips—it will begin to move beyond short-term group P/E frameworks and adopt a longer-term perspective on valuation. This parallels the narrative shift Tesla underwent from an automotive company to an AI company, though Xiaomi's path originates from its smartphone and AIoT ecosystem.

Despite near-term cost pressures, Xiaomi's long-term growth thesis remains clear. First, the automotive business has become a second growth curve. In 2025, Xiaomi delivered 411,082 vehicles, with the Xiaomi SU7 leading domestic sedan sales in the over-200,000-yuan segment, and the Xiaomi YU7 ranking first in domestic mid-to-large SUV sales for seven consecutive months. Goldman Sachs forecasts 610,000 Xiaomi EV deliveries in 2026 (190,000 SU7, 380,000 YU7, 40,000 large SUV). Second, globalization is progressing steadily. Xiaomi smartphones ranked among the top three in shipments in 58 countries and regions globally, and among the top five in 70. Market share in Latin America and Southeast Asia increased to 17.5% and 17.0%, respectively, with rankings rising to second place. Third, the AIoT ecosystem continues to expand. By the end of 2025, the Xiaomi AIoT platform connected 1.079 billion devices, with 22.7 million users owning five or more devices. Global monthly active users reached 754 million, including over 190 million in mainland China.

A comparison of Xiaomi's financial report and the Goldman Sachs analysis reveals that while Xiaomi faces short-term cost pressures and profitability challenges, its long-term ecosystem value and AI strategy are reshaping the company's valuation logic. As Goldman Sachs noted, the report's value lies not in short-term earnings forecasts—which have already been revised downward twice—but in addressing a more fundamental question: What is the true value of Xiaomi's ecosystem? Amid cyclical adjustments in the consumer electronics industry and the phase-out of subsidies for new energy vehicles, Xiaomi is building a comprehensive ecosystem spanning consumer electronics, smart mobility, and physical AI through its triple-driver strategy of "Smartphone × AIoT × Automotive." The strong 2025 financial results demonstrate the initial success of this strategy, while the Goldman Sachs report reminds the market to look beyond short-term volatility and recognize Xiaomi's long-term value in technology R&D, ecosystem development, and global expansion. With the upcoming launch of the YU7 GT model (expected mid-2026) and continuous breakthroughs in AI technology, Xiaomi stands at a critical juncture in its transformation from a hardware company to a "Human x Car x Home Full Ecosystem + AI" technology firm.