Key Highlights

• Xiaomi shares surged 5.6% to HK$27.64 after the company released its Q2 2026 financial results.
• Second-quarter revenue reached RMB 108.9 billion ($16.15 billion), a 6.1% annual decline that nonetheless surpassed analyst forecasts.
• Smartphone average selling prices hit an all-time high, and the segment posted an 8.5% gross margin that exceeded projections despite elevated memory costs.
• The electric vehicle division shipped 104,199 units in Q2, while worldwide monthly active users climbed to a record 766.5 million.
• Executives indicated that the pace of memory cost inflation is decelerating, and pre-orders for the newly launched Pengcheng EV exceeded company projections.

Shares of Xiaomi rallied 5.6% to HK$27.64 on Tuesday following the release of second-quarter 2026 financial results that exceeded market forecasts, easing some of the investor concern that had built around component costs, smartphone demand, and the company’s ability to scale newer businesses at the same time. Xiaomi Corporation (XIACY) ranked among the most significant gainers in Hong Kong trading on the day, while the broader Hang Seng index remained relatively unchanged.

Revenue Tops Consensus Despite Annual Declines

Second-quarter revenue totaled RMB 108.9 billion, equivalent to approximately $16.15 billion. The figure represented a 6.1% decline year over year, but it marked a 9.9% sequential increase from the first quarter of 2026 and came in above analyst consensus estimates.

Gross profit fell 17.2% compared with the prior-year period to RMB 21.6 billion, and operating profit declined 19.1% on an annual basis to RMB 10.9 billion. These year-over-year contractions underscore the impact of elevated memory component pricing and heightened competitive pressures that the company had previously highlighted.

Adjusted net income for the quarter stood at RMB 6.2 billion, representing a 2.4% increase from Q1 2026. While the annual comparisons showed pressure, market participants concentrated on the quarter-over-quarter improvements and on management's forward-looking commentary regarding cost trends.

The company summarized the results on X:

Xiaomi's Q2 2026 results are in. Revenue reached RMB108.9 billion, surpassing RMB100 billion once again, while adjusted net profit came in at RMB6.2 billion. Global MAU climbed to a record high of 767 million, and connected devices on our AIoT platform reached 1.16 billion.… pic.twitter.com/VTTPcmtXmq

— Xiaomi (@Xiaomi), August 18, 2026

Smartphone Division Shows Resilience

The smartphone business delivered encouraging results. Average selling prices reached a record level during the quarter, and the division's gross margin of 8.5% surpassed market forecasts despite memory component costs remaining at historically elevated levels.

Worldwide smartphone shipments came to 31.2 million units in the second quarter, a 6% decrease compared with the corresponding period in 2025.

Record User Base and Internet Services Strength

Global monthly active users achieved a record 766.5 million, climbing 4.8% year over year. The internet services division delivered a gross margin of 76.8%, and connected devices on the company's AIoT platform reached 1.16 billion, according to the results announcement. Those figures help show how Xiaomi is leaning on its broader ecosystem as it works through softer handset volumes and a cost environment that remains uneven across hardware categories.

Electric Vehicle Segment Maintains Momentum

Xiaomi's electric vehicle and smart automotive division delivered 104,199 vehicles throughout the quarter, continuing the upward trajectory the company has maintained since launching its EV operations. Pre-sale demand for the newly introduced Pengcheng EV model surpassed the company's internal forecasts, providing investors with additional confidence in the segment's near-term reception.

Management Points to Moderating Memory Costs

Company executives emphasized that the velocity of memory cost escalation is transitioning to a more moderate pace. The commentary served as an important reassurance, given that memory pricing had represented one of the primary concerns weighing on investor sentiment.

The company also acknowledged that geopolitical volatility, increasing component expenses, and fierce competitive dynamics continued to present challenges throughout the quarter. Artificial intelligence development was identified as an influential factor reshaping the competitive environment.

Source: Blockonomi