Jefferies Cuts Xiaomi Target Price by 30% as Soaring Memory Costs Squeeze Margins
Jefferies Financial Group Inc. has slashed its target price for Xiaomi by 30%, warning that surging memory costs will weigh heavily on the Chinese technology giant’s smartphone shipments and profit margins in 2026.
Analysts led by Edison Lee lowered their price target to HK30.45 from HK43.36, a level below the stock’s latest closing price of HK$31.58 on Tuesday. The downgrade reflects growing pessimism regarding Xiaomi's core handset business, as well as weakening prospects for its electric vehicle (EV) and AIoT (Artificial Intelligence of Things) divisions.
The brokerage forecasts a challenging operating environment for smartphone manufacturers in the coming year. Jefferies estimates that memory costs for most original equipment manufacturers (OEMs) will surge 3.6 times year-on-year by 2026. Under this cost pressure, the analysts project Xiaomi’s smartphone sales volume could plummet by 55%.
Beyond the long-term outlook, Jefferies signaled immediate headwinds for the company, suggesting Xiaomi’s earnings for the fourth quarter of 2025 may miss expectations across all three major business segments.
In the smartphone sector, third-party data cited by the analysts indicates a 13% decline in fourth-quarter shipments, a drop steeper than initially anticipated. Consequently, Jefferies estimates the gross margin for this division will fall below 9%.
The outlook for Xiaomi’s AIoT segment has also been revised downward. The brokerage cut its fourth-quarter revenue forecast for the unit by 25%, citing sluggish demand for home appliances and wearable devices, exacerbated by a reduction in government subsidies.
Performance in the EV division is similarly expected to disappoint. Jefferies anticipates fourth-quarter gross margins for the auto unit will come in below expectations. Factors contributing to the margin compression include lower-than-expected sales volume for the high-performance SU7 Ultra model and the financial impact of tax subsidies offered in November to stimulate new orders.