Jefferies Downgrades Xiaomi to Underperform After 57% Profit Slump

Amid intensifying competition in the global tech sector and rising operational costs, Jefferies has downgraded Xiaomi to "Underperform" citing significant financial challenges. According to reports, the company experienced a sharp 57% decline in net income, falling to 4.72 billion yuan in the first quarter of 2026. Furthermore, Xiaomi's global smartphone shipments dropped by 19%, a decline that significantly outpaces the overall market's contraction of 2.9%.

These pressures emerge as Xiaomi grapples with surging memory prices inflating production costs, alongside heavy investments and deepening losses in its nascent electric vehicle (EV) division. Compared to peers, market data shows relative stability for giants like Apple and Samsung, while Xiaomi faces its first revenue decline in three years. Analysts suggest the widening gap between Xiaomi's performance and the broader market reflects a loss of market share to domestic rivals such as Honor and Huawei.

Traders should monitor Xiaomi's stock (1810.HK) following this downgrade, focusing on any updates regarding EV production efficiency. Looking at the economic calendar, upcoming global Manufacturing PMI data may further influence sentiment across the tech manufacturing sector. The company's ability to pass higher component costs to consumers remains a critical factor for recovering profit margins in the coming quarters.