Xiaomi's Profit Surge: A New Era of Tech Leadership Begins

The tech world is witnessing a seismic shift, and Xiaomi (HK:1810) is at the epicenter. With Q1 2025 profits soaring to RMB10.9 billion—a 160% surge from Q1 2024—this Chinese tech titan isn't just selling gadgets anymore. It's building an unstoppable ecosystem that's rewriting the rules of consumer tech leadership. Let's dissect why this is a buy now moment.

The End of the Hardware Race? Xiaomi Says Yes

For years, Xiaomi was defined by its razor-thin-margin smartphone battles. Not anymore. The company's Q1 results reveal a strategic pivot to high-margin ecosystems, where hardware is just the entry point. Take IoT: revenue here jumped 58.7% YoY to RMB32.3 billion, with gross margins hitting 25.2%—a 5.4% YoY improvement. This isn't about selling more air conditioners; it's about owning the platform that connects them.

The IoT ecosystem now hosts 943.7 million devices, up 20% YoY, creating a data-rich flywheel. Xiaomi's internet services, which leverage this data, grew 12.8% YoY to RMB9.1 billion. With 718.8 million global monthly active users (including 181 million in China), this is a software-driven moat—and it's widening.

The EV Play: Losses Today, Dominance Tomorrow

The EV segment is the wildcard. While it posted an operating loss of RMB520 million in Q1, revenue here rocketed 11% QoQ to RMB18.1 billion, thanks to the SU7 sedan's 75,869 deliveries. The upcoming YU7 SUV, priced 60%-70% higher than Tesla's Model Y, isn't just a product—it's a premiumization bet to boost margins.

Critics will cite losses, but Xiaomi is playing the long game. Its R&D investment jumped 30% YoY to RMB6.7 billion, with 21,731 engineers now building chips (like the 3nm XRING O1) and AI tools. This isn't a car company—it's a tech company in EVs.

The Margin Makeover: Hardware Meets Software

The real magic is in the margins. Smartphone gross margins improved as average selling prices hit a record RMB1,211, up 22% YoY. The premium Xiaomi 15 Ultra sold 90% more units than its predecessor. Meanwhile, IoT's 25.2% gross margin and internet services' 76.9% margin show how ecosystem synergies are boosting profitability.

This isn't just cost-cutting—it's a revenue upgrade. Xiaomi's “Human × Car × Home” strategy is now a cash engine, not a PowerPoint slide.

Why This Is a Buy Now Call

The numbers scream opportunity:
- Stock Price Surge: Xiaomi's market cap has tripled in 12 months to HK$1,375 billion, but it's still undervalued at 15x forward P/E vs. peers at 20x+.
- Market Leadership: Xiaomi just reclaimed China's smartphone crown (18.8% share) and is top 3 globally for the 18th straight quarter.
- AIoT Dominance: With 258 million smart home devices sold and partnerships with 5,000+ brands, this ecosystem is unassailable.

The Bottom Line: Xiaomi's Future Is Already Here

Xiaomi isn't a hardware relic—it's a full-stack tech giant. Its Q1 profit surge isn't an anomaly; it's the first inning of a decade-long ecosystem play. With AI integration (via Xiaomi HyperOS 2) and EVs driving growth, this stock is primed to outperform.

Act now: The “Buy” technical signal and RMB60 price target are conservative. At current levels, this is a once-in-a-decade chance to own the future of consumer tech.

This is the moment to jump in—before the rest of the world catches on.