Goldman Sachs Revises Outlook on Xiaomi Amid Operational Headwinds

The Chinese technology conglomerate Xiaomi is currently navigating a complex landscape of challenges. In response to mounting pressures, analysts at Goldman Sachs have significantly adjusted their financial forecasts for the company, though they maintain a positive long-term view.

Analyst Downgrade and Persistent Challenges

Goldman Sachs has identified rising input costs and the phase-out of Chinese government subsidies for electric vehicles (EVs) as primary concerns. Consequently, the investment bank has reduced its adjusted net profit estimates for the years 2025 through 2027 by as much as 24%. Its price target for Xiaomi shares has been lowered from HK$47.50 to HK$41, while the firm’s “buy” recommendation stays in place.

Beyond these revised projections, operational difficulties are adding to the strain. In India, authorities have accused the company of customs duty evasion. The initial claim of $72 million could potentially double with penalties, and approximately $610 million of corporate assets remain frozen. Simultaneously, an intense price war in China’s EV sector is squeezing profitability across the industry. This environment has led to a cautious reception from investors regarding Xiaomi’s ambitious target to deliver 550,000 vehicles this year. The market sentiment is reflected in the share price, which has declined 17.15% since the start of the year. The stock closed yesterday’s session at €3.72, hovering just above the 52-week low marked in early March.

Should investors sell immediately? Or is it worth buying Xiaomi?

Corporate Countermeasures: Buybacks and Automation

Xiaomi’s management is actively implementing strategies to counter the negative trend. The company is deploying substantial capital through a share repurchase initiative, spending over HK$3.2 billion last month alone to acquire its own shares—the highest monthly buyback volume in more than two years.

On the operational front, the tech giant is focusing on automation to boost efficiency. In its own electric vehicle factory, a proprietary humanoid robot recently completed a three-hour continuous shift. The system achieved a success rate exceeding 90% in assembly tasks and consistently met a cycle time of 76 seconds, integrating seamlessly into the live production environment.

Upcoming Catalyst: Annual Results and Dividend Vote

A key date for potential short-term momentum is scheduled for March 24. On this day, the board of directors will approve the full-year 2025 financial results. The meeting will provide crucial clarity on the profitability of both the smartphone and EV divisions. Furthermore, a historic item is on the agenda: the board will vote on the potential distribution of the first final dividend since the company’s initial public offering.