Xiaomi Q2 Net Profit Declines for Third Consecutive Quarter, Commits to Large-Scale AI Investment
Nashnova编辑部
Xiaomi's Q2 net profit dropped 20.3% year-on-year to RMB 9.46 billion — the third consecutive quarterly decline — yet management made clear it will not scale back AI investment. The bet-big-now, monetize-later gamble is now front and centre.
How bad is this quarter?
Revenue came in at RMB 108.9 billion, down 6.1% year-on-year. Net profit fell 20.3% to RMB 9.46 billion.
Management pointed to two pressure sources: elevated memory prices and intensifying competition. This means → costs rose while revenue shrank, squeezing margins from both ends.
This is the third straight quarter of year-on-year profit decline — not a one-off dip but a sustained downward trend.
Profits are falling — why keep pouring money into AI?
CFO Lin Shiwei said on the earnings call: "Our AI investment is still in a heavy spending phase, but as a large enterprise, Xiaomi is in no rush to monetise immediately."
In plain terms = Xiaomi is saying: the money we spend now is not expected to pay back right away — we are laying the foundation first.
First-half R&D spending rose 25.6% year-on-year to RMB 18.2 billion, with AI-related outlays accounting for nearly 30%. This reflects a commitment backed by real capital, not just talking points.
How does management balance short-term pain with long-term strategy?
President Lu Weibing was blunt: "Memory prices remain elevated and competition is fierce, but short-term pressure will not change our long-term strategy."
This means → management already expects profit pressure to persist, yet it has chosen to absorb the hit rather than cut R&D.
Across the US and China, tech companies are ramping AI infrastructure capex. Market scepticism over whether spending can convert into adequate returns keeps growing. Xiaomi's AI monetisation path and timeline will be the key marker the market watches to reassess its valuation.
Content is for reference only, not financial advice.