What Xiaomi Bears Saw Before The Fall

If you had decided on 16 October 2025 to sit out Xiaomi and focus elsewhere, the past year might now feel like a bullet dodged. For Xiaomi shareholders, the loss over the past year was 42.0%, including dividends. That result is painful, yet it raises a sharper question. With bullish and bearish analysts openly disagreeing on future margins, smartphone maturity and EV risks, which recorded assumptions could you have stress tested before committing capital?

Xiaomi is not the only name tied to this theme. Zero in on 16 nuclear energy infrastructure stocks and compare how each one is priced.

The Two Xiaomi Stories Investors Had To Weigh

The shares cost HK$47.7 at the start of the period, and Xiaomi investors were effectively choosing between two very different stories about what came next.

On the optimistic side, one Narrative tied a Fair Value of HK$66.01, a price implied by its model, to assumptions of 21.3% annual revenue growth and a 9.1% profit margin helped by AIoT expansion and premium products.

The more cautious view pointed to a Fair Value of HK$35.12 based on smartphone market saturation, rising research costs and pressure on long term profitability.

What The Results Put To The Test For Xiaomi

The clearest data point came from Xiaomi’s Q2 2026 filing. Revenue slipped from C¥115,956.1m to C¥108,921.6m, net income dropped from C¥11,904.4m to C¥9,462.4m, and net margin moved from 10.3% to 8.7%. That pattern challenged the bullish margin story and supported a more cautious view on smartphone pressure and rising costs.

The takeaway for other stocks is simple. When a thesis depends on better profitability, track net margin against the original forecast, not just headline revenue or optimistic product news.

What Xiaomi’s Lower Price Now Asks You To Believe

Xiaomi trades at HK$26.66, well below where holders were a year ago and below the Fair Value implied by the selected bullish Narrative. That view focuses on foldables, broader hardware and buybacks to support the story.

The key assumption a buyer must weigh is that Xiaomi’s premium ecosystem and new devices lift pricing power enough to support stronger margins over time.

"The company's push into premiumization, including sales of high-end smartphones, appliances, and electric vehicles, together with the launch of proprietary 3nm chips and advanced AI features, is presented as a basis for higher average selling prices and improved net margins as Xiaomi captures greater value per customer."

Not everyone reads the same price the same way. → See the higher figure this Narrative lands on, and how it gets there

Before The Next Story Makes Headlines

This company's disappointment is already part of the story. Your next idea could come from looking where the price and the possibilities still seem far apart. Here are three companies priced below our estimates.

• Company 1 - 21% below our estimate - builds forensic SaaS tools used by agencies handling complex digital evidence.
• Company 2 - 30% below our estimate - supplies AI supercomputing systems supporting large models when cloud capacity constraints appear.
• Company 3 - 41% below our estimate - equips port operators with electrified cranes designed for automation and reduced emissions.

Three companies from the same screener. Open every one of the 193 undervalued companies on it →

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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