Xiaomi’s shares have fallen 24% YTD after the Beijing‑based maker posted a stark profit decline in Q1. Net profit plunged 57% to 4.72 billion yuan ($694.7 million), while revenue slipped 11% to 99.14 billion yuan. The results missed analyst forecasts for both earnings and sales.

The squeeze stems from a perfect storm of rising memory costs, fierce handset competition and tepid demand for Xiaomi’s expanding portfolio. AI‑driven applications are gobbling up DRAM and NAND, inflating component bills and eroding margin on smartphones. Meanwhile, rivals such as Apple and Samsung continue to command premium pricing.

Xiaomi’s push into electric vehicles has not insulated it from the broader slowdown in China’s auto market. The nascent car unit faces weak pre‑orders and limited scale, while the company’s smart‑home segment feels the fade of government subsidies that once buoyed sales. Both lines strain cash flow.

Investors are weighing whether Xiaomi can rebalance its business mix before margins deteriorate further. With share price already down a quarter this year, the earnings gap may pressure the firm to tighten cost controls or delay new product rollouts. The latest numbers signal a near‑term earnings headwind for the group.