🔥 Xiaomi after a ~55% drop from its all-time high. Is this company much more than just a phone maker?

Xiaomi ($1810.HK) has started to interest me much more in recent days.

The stock is currently at about 27.8 HKD, while its all-time high was around 61.45 HKD.

That means a drop of roughly:

📉 −55% from ATH

And yet the company itself has, in my opinion, become significantly more interesting over the last few years. (MarketScreener)

When you say Xiaomi, most people still picture mainly cheaper Android phones.

But I'm starting to look at the company a bit differently.

📱 smartphones 🏠 smart home and IoT 🚗 EVs 🤖 robotics 🧠 AI 💻 own chips 🌐 HyperOS and internet services

Xiaomi is gradually trying to build one big tech ecosystem:

person → phone → home → car → AI

And maybe one day:

→ robot.

That's what I find most interesting about the whole company.

Xiaomi is already one of the largest smartphone makers in the world, has more than a billion IoT devices connected to its platform, and is also very aggressively building its automotive business.

For example, the YU7 got around 240,000 firm orders in the first 18 hours after its launch, and Xiaomi's stock hit record levels at that time. (Reuters)

🚗 And in my opinion, cars fundamentally change the investment thesis.

A car is no longer just a car.

It's another smart device.

If Xiaomi can connect phone, home and car through its own software, it creates an ecosystem that may be increasingly hard for customers to leave.

And then there are the in-house chips.

Xiaomi is already investing huge sums in semiconductor design and AI. It wants to invest at least 60 billion RMB in AI alone over three years. (Reuters)

It's the combination of:

AI + in-house chips + HyperOS + cars + smart home

that I find much more interesting than the smartphone business alone.

🤖 I'm not really factoring robotics into the valuation at all yet.

I see it more as optionality.

If it eventually becomes a real business, great.

If not, the investment thesis doesn't have to rely on it.

⚠️ But Xiaomi is certainly not without problems.

And this is why I'm not fully blindly bullish yet.

The biggest problem, in my view, is margins.

Smartphones are a very competitive hardware business and Xiaomi has also long pushed a philosophy of low hardware margins.

The company wants to offer the best price/performance ratio and then pull customers into its ecosystem.

That's great for the customer.

But the question for the investor is:

👉 Can Xiaomi eventually properly monetize this huge ecosystem?

That's exactly why internet services are most important to me.

They have a completely different economics than hardware, with gross margin around 75%+.

If Xiaomi can gradually increase the share of high-margin services, software and AI revenue, the economics of the whole company could improve significantly.

If not, Xiaomi could one day sell millions of cars, robots, phones and appliances and still remain a relatively low-margin company.

💰 Management is also interesting.

Xiaomi is still led by founder Lei Jun.

It's a founder-led company and Lei Jun still has a huge economic stake in the company's success.

The company has also been using buybacks significantly recently.

I like that.

On the other hand, thanks to the dual-class structure, Lei Jun has very strong voting control, so investors basically have to trust his long-term capital allocation.

But so far I rate his execution very highly.

📊 What could Xiaomi look like by 2030?

My simple base case:

📱 smartphones: ~+3% CAGR 🏠 IoT: ~+9% 🌐 internet services: ~+18% 🚗 EV / AI: ~+18%

Result:

Revenue around 739 billion RMB.

At an 8% net margin:

💰 ~59 billion RMB net profit.

And that's still without having to assume:

❌ robotics dominance ❌ Apple margins ❌ Xiaomi as the next Nvidia ❌ huge success of in-house chips outside its own ecosystem

Those are more like bonuses for me.

So for me, Xiaomi is a very interesting case today.

It's not yet a beautiful high-margin compounder.

It's more like:

👉 a technology platform in a massive build-out phase.

And after roughly a 55% drop from its all-time high, it already makes sense to me to watch this company much more closely. (MarketScreener)

The biggest question for me remains simple:

🔥 Can Xiaomi turn its huge hardware ecosystem into significantly higher FCF and earnings PER SHARE?

If yes, today's valuation could look very attractive in a few years.

If not, it may remain just a great company with average economics.

What do you think about Xiaomi?

Do you see it as a future tech ecosystem of "phone + home + car + AI", or still mainly a low-margin hardware maker?