ZTE Corporation's stock plummeted 5.02% during Tuesday's intraday trading session, extending recent declines as the market continues to digest the company's first-quarter 2026 financial results.

The sharp drop follows ZTE's Q1 earnings report which revealed a significant 46.58% year-over-year decline in net profit despite 6% revenue growth, highlighting a concerning revenue-profit divergence. Goldman Sachs contributed to the negative sentiment by lowering its profit forecasts for 2026-2028 and reducing its target price for ZTE's Hong Kong-listed shares from HK$40.4 to HK$37.5, while maintaining a "Neutral" rating.

Analysts attribute the weakness to substantial margin pressure, with gross margin falling to 28.3% from 34.3% a year earlier, driven by a rising mix of lower-margin computing power server products (now 27% of revenue) and reduced domestic telecommunications capital expenditure affecting network product revenue contributions.