Goldman Sachs Cuts Xiaomi Target to HK$40 on EV Losses

Goldman Sachs announced on May 27, 2026, that it has lowered its 12-month price target for Xiaomi Corporation from HK$44 to HK$40. The revision reflects mounting losses from the Chinese tech giant's electric vehicle division, which is compressing near-term profitability. The new target implies a significant discount to the stock's previous valuation and underscores the substantial capital investment required to compete in the crowded EV market. This adjustment occurred as Goldman Sachs' own stock traded at $994.52, up 0.64% on the day.

Context — why this matters now

Xiaomi's foray into electric vehicles represents a high-stakes strategic pivot for a company historically known for its affordable smartphones and consumer electronics. The initial capital outlay for automotive manufacturing, supply chain development, and retail network establishment has proven substantial. This price target cut follows a period of intense price competition within China's EV sector, pressuring margins for both new entrants and established players like BYD and Nio.

The macro backdrop adds further pressure, with Chinese consumer spending remaining cautious and global trade tensions influencing supply chain costs. Goldman's reassessment signals that the timeline to profitability for Xiaomi's auto unit may be extending beyond initial analyst projections. The move is a direct response to the company's latest quarterly earnings, which detailed deeper-than-expected operational losses within the Smart EV segment.

Data — what the numbers show

The new HK$40 price target represents a 9% reduction from Goldman's previous target of HK$44. This downgrade places Goldman's outlook below the consensus analyst price target, which had clustered around HK$42-HK$45. Xiaomi's stock has been volatile over the past year, heavily influenced by monthly EV delivery figures and updates on production capacity.

For comparison, Target Corporation, another major retailer navigating a complex economic environment, saw its stock trade at $125.43, down 0.57% as of 08:01 UTC today. The price action in these two consumer-facing companies highlights divergent sector-specific pressures. Xiaomi's market capitalization has been impacted by the EV investment, contrasting with more stable valuations in traditional retail.

The EV division's operating losses are estimated to have widened by over 40% year-over-year, based on the latest financial disclosures. This burn rate is consuming cash flow generated by Xiaomi's highly profitable smartphone and IoT ecosystem businesses.

Analysis — what it means for markets / sectors / tickers

The price target cut has immediate implications for auto sector valuations, particularly for other tech companies attempting similar cross-sector expansions. Apple's long-rumored Apple Car project, for instance, will face increased scrutiny regarding its potential capital intensity and path to breakeven. Established automakers like Volkswagen and General Motors may benefit from a renewed investor focus on execution over hype in the EV transition.

A key counterargument is that Xiaomi's deep integration of its EVs with its existing ecosystem of smart devices could create a unique long-term competitive advantage that pure-play automakers cannot replicate. This ecosystem approach could eventually drive higher margins and customer loyalty, justifying the near-term losses.

Trading flow data indicates some institutional investors are rotating out of capital-intensive EV stories and into companies with clearer near-term profitability. This is evidenced by relative strength in semiconductor suppliers over auto manufacturers in recent sessions.

Outlook — what to watch next

Investors should monitor Xiaomi's Q2 2026 earnings release, expected in late August, for updated guidance on EV unit economics and any revised production targets. The next major catalyst will be the company's monthly EV delivery figures, typically released within the first five business days of each month.

Key technical levels to watch for Xiaomi stock include HK$38.50, which has acted as a historical support level, and HK$42.50, a recent resistance point. A sustained break below HK$38 could trigger further analyst reassessments.

The Chinese government's policy announcements regarding consumer subsidies for electric vehicles, expected around the July Politburo meeting, will also be critical. Any reduction in support could further pressure the financial models of all EV makers, while an extension would provide relief.

Frequently Asked Questions

How does Goldman Sachs' new target compare to other analysts?

Goldman's HK$40 target is now among the more conservative on Wall Street. Several other investment banks, including Morgan Stanley and JPMorgan, maintain targets in the HK$42-HK$46 range. The divergence reflects differing views on how quickly Xiaomi can scale its EV production and achieve cost efficiencies to stem losses.

What does this mean for Xiaomi's dividend?

The significant capital expenditure required for the EV business increases the likelihood that Xiaomi will conserve cash, potentially leading to a reduction or suspension of its dividend payments. The company has historically paid a modest dividend, but priorities may shift entirely toward funding its automotive ambitions, impacting income-focused shareholders.

Is Xiaomi's EV venture similar to Tesla's early days?

There are parallels in the high initial burn rate and skepticism from traditional analysts. However, Xiaomi enters a far more mature and competitive market than Tesla did. Tesla benefited from a first-mover advantage and years of limited competition, whereas Xiaomi must immediately compete with dozens of well-funded rivals in China, the world's largest EV market.

Bottom Line

Xiaomi's costly EV expansion is pressuring near-term valuations despite its long-term strategic potential.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.