Xiaomi shares rose sharply on the day after the company released second-quarter results that showed sequential revenue and profit growth, and management provided an encouraging update on memory cost dynamics.
The company reported quarterly revenue of RMB 108.9 billion, a 9.9% increase versus the first quarter of 2026. Adjusted net profit stood at RMB 6.2 billion, a sequential rise of 2.4% - a combination investors interpreted as a sign that the most difficult phase of the cycle may be passing.
Smartphone operations were singled out in the report. Average selling prices reached a record high, and the segment produced a gross margin of 8.5%, outperforming market expectations despite memory component costs remaining historically high. Management said the memory-cost environment is transitioning to a more gradual pace of increase, a development that helped reassure investors.
Automotive and services likewise contributed to the quarter's positive tone. The smart electric vehicle business delivered 104,199 units in Q2. Management also noted that pre-sale orders for the new Pengcheng EV model exceeded the company's internal expectations. In internet services, Xiaomi reported a gross margin of 76.8% while global monthly active users reached an all-time high of 767 million.
Market context reinforced the stock's outperformance. Xiaomi was among a small group of stocks showing strength while the broader Hang Seng index traded largely sideways.
What stood out - Sequential revenue and adjusted profit growth, record smartphone average selling prices and a stronger-than-expected smartphone gross margin despite elevated memory costs; solid EV deliveries and robust internet services margins and user metrics.
Investor takeaway - The combination of improving sequential results and management commentary on the memory-price trajectory supported a positive market reaction, lifting the share price to HK$27.64, up 5.6% on the session.