J.P. Morgan sees limited near-term improvement for Xiaomi; EV target cut could set a short-term floor
J.P.
J.P. Morgan cut its adjusted EPS forecasts for Xiaomi for fiscal 2026 and 2027 by 11.3% and 10.1%, respectively.
The bank's core view is that Xiaomi can no longer achieve its 550,000-vehicle EV delivery target for 2026. J.P. Morgan forecasts 465,000 deliveries, while first-half 2026 deliveries reached only about 30% of the full-year target.
The smartphone business continues to face pressure from rising DRAM and NAND memory prices, which are squeezing gross margins. J.P. Morgan expects second-quarter 2026 earnings to fall 44% year over year.
Xiaomi's AI and robotics initiatives—including MiMo V2.5, which the note says ranks first globally by token usage—are not expected to have a material impact on the stock over the next 12 months.
The stock is already approaching its historical low valuation range of 10-15 times price-to-earnings, corresponding to HK$24-HK$27. J.P. Morgan says an announcement lowering the EV target could become a short-term bottoming catalyst, although it expects a rapid near-term reversal to remain unlikely.
The note identifies Xiaomi Group as exposed to downside from earnings pressure and the risk of an EV-target reduction. It views the memory and storage supply chain more favorably because DRAM and NAND average selling prices are continuing to rise by 15%-18%.
Some of the downside appears to be priced in: Xiaomi's stock is near its historical low valuation range, but a lower EV target itself has not yet been fully priced in.
The listed catalysts are the formal start of SkyNomad deliveries in September 2026; an announcement lowering the EV target, which could provide a short-term floor; second-quarter 2026 results, for which earnings are expected to decline 44% year over year; and the direction of memory prices, identified as a key upside risk.
The bank's core view is that Xiaomi can no longer achieve its 550,000-vehicle EV delivery target for 2026. J.P. Morgan forecasts 465,000 deliveries, while first-half 2026 deliveries reached only about 30% of the full-year target.
The smartphone business continues to face pressure from rising DRAM and NAND memory prices, which are squeezing gross margins. J.P. Morgan expects second-quarter 2026 earnings to fall 44% year over year.
Xiaomi's AI and robotics initiatives—including MiMo V2.5, which the note says ranks first globally by token usage—are not expected to have a material impact on the stock over the next 12 months.
The stock is already approaching its historical low valuation range of 10-15 times price-to-earnings, corresponding to HK$24-HK$27. J.P. Morgan says an announcement lowering the EV target could become a short-term bottoming catalyst, although it expects a rapid near-term reversal to remain unlikely.
The note identifies Xiaomi Group as exposed to downside from earnings pressure and the risk of an EV-target reduction. It views the memory and storage supply chain more favorably because DRAM and NAND average selling prices are continuing to rise by 15%-18%.
Some of the downside appears to be priced in: Xiaomi's stock is near its historical low valuation range, but a lower EV target itself has not yet been fully priced in.
The listed catalysts are the formal start of SkyNomad deliveries in September 2026; an announcement lowering the EV target, which could provide a short-term floor; second-quarter 2026 results, for which earnings are expected to decline 44% year over year; and the direction of memory prices, identified as a key upside risk.