Assessing Xiaomi Shares Amid 4% Weekly Dip and 57% Surge in 2025

Thinking about what to do with your Xiaomi stock? You’re not alone. It’s the kind of decision that has investors everywhere scratching their heads, especially after big swings in the market. Xiaomi has delivered jaw-dropping numbers over the long haul. For example, the stock posted a 124.6% return over the past year and a 526.2% gain over three years. Even over five years, the stock has surged by 137.6%. However, there has been some turbulence recently. The share price slid by -4.4% in the last week and is down -5.1% over the past month, which could have you wondering whether it is a good time to buy, sell, or just wait. Part of this recent slide reflects a mix of shifting market sentiment and, perhaps, a reassessment of tech risk as global trends continue to evolve. Still, with a year-to-date return of 56.9%, Xiaomi continues to display strong growth momentum.

When considering whether the company is undervalued, several factors come into play. Out of six key valuation checks, Xiaomi earns a score of 1, meaning it only stands out as undervalued on one front. So, is the current risk worth the potential reward? Before making any decisions, let’s explore the different ways analysts assess Xiaomi’s value. Be sure to keep reading, as there is an even more insightful angle to understanding valuation discussed at the end of this article.

Xiaomi scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Xiaomi Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company’s value by projecting its future cash flows and then discounting those amounts back to today’s terms. This helps investors assess what the business is actually worth based on expected real earnings, not just market hype.

For Xiaomi, the reported last twelve months Free Cash Flow (FCF) stood at CN¥55.5 billion. Analyst projections indicate steady growth, with forecasts rising to CN¥68.7 billion by 2029 and then extrapolated to CN¥60.8 billion for 2035. It is important to note that while estimates up to five years ahead are sourced from analysts, all longer-term projections rely on modeling and should be viewed as indicative rather than certain.

Using these cash flow projections, the DCF analysis calculates Xiaomi’s intrinsic value per share at HK$38.69. Based on where the shares are currently trading, this means the stock is approximately 37.9% above what the DCF model suggests is fair value, implying Xiaomi is overvalued according to this method.

Result: OVERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Xiaomi.

Our Discounted Cash Flow (DCF) analysis suggests Xiaomi may be overvalued by 37.9%. Find undervalued stocks or create your own screener to find better value opportunities.

Approach 2: Xiaomi Price vs Earnings

The Price-to-Earnings (PE) ratio is widely regarded as a key valuation metric for profitable businesses like Xiaomi because it directly links a company’s share price to its actual earnings. For investors, the PE ratio helps judge whether the market is pricing in appropriate expectations for future growth and the level of risk compared to similar companies.

However, what qualifies as a "normal" or "fair" PE ratio can shift depending on several factors. Companies with higher expected earnings growth and lower risk typically command higher PE multiples, while slower-growing or more volatile companies will often trade at lower ones. The Tech industry’s current average PE stands at 24.3x, while Xiaomi’s peer group averages about 22.2x.

Xiaomi is currently trading at 34.2x earnings, which is noticeably above both the industry and peer group benchmarks. To provide a more tailored benchmark, Simply Wall St calculates a proprietary "Fair Ratio" for Xiaomi, this is 26.4x. The Fair Ratio goes beyond simple averages by blending relevant growth, risk, profit margins, market size, and industry factors unique to the company. This makes it a more nuanced and investor-focused reference point than raw industry or peer numbers.

Since Xiaomi’s current PE ratio of 34.2x is significantly higher than its Fair Ratio of 26.4x, the stock appears overvalued on this metric.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Xiaomi Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is simply your investment story for a company. It connects your perspective (such as where Xiaomi’s business is headed, future revenue and profit margins, and what it might be worth) to a concrete financial forecast and an estimated fair value.

Rather than just relying on ratios or analyst targets, you can create (or adopt) a Narrative about Xiaomi on Simply Wall St’s Community page, used by millions of investors worldwide. Narratives make the process approachable by guiding you to link your company thesis to actual forecasts, showing exactly what assumptions lead to your fair value and how it stacks up against the current market price.

With Narratives, you can make smarter buy or sell decisions by comparing your calculated Fair Value against today's Price. Because Narratives automatically update when fresh news or earnings drop, you stay in control as the story evolves.

For example, right now, one Xiaomi Narrative sees the stock fairly valued at HK$36.17 using more cautious growth and margin assumptions, while another projects a fair value as high as HK$80.38 based on big upside from EVs and global expansion. This shows how investors can easily explore both bullish and bearish cases side by side.

For Xiaomi, we'll make it really easy for you with previews of two leading Xiaomi Narratives:

🐂 Xiaomi Bull Case

Fair Value: HK$66.01

Undervalued by approximately 19.2% versus current price

Forecast Revenue Growth: 21.3%

• Growth is driven by expansion of Xiaomi’s AIoT smart ecosystem, premium product lineup, and global retail presence. These factors strengthen cross-selling and improve margins.
• Heavy investment in AI, custom chips, and environmental initiatives differentiates products, builds recurring higher-margin services, and solidifies brand value against market and regulatory risks.
• Main risks include smartphone market maturity, price competition, and international execution challenges, especially in the EV and appliance segments. These factors could limit Xiaomi’s ability to deliver margin and earnings growth.

🐻 Xiaomi Bear Case

Fair Value: HK$51.83

Overvalued by approximately 2.9% versus current price

Forecast Revenue Growth: 15.0%

• Success is built on disruptive pricing, broad IoT ecosystem, and global expansion, balanced by cost control and community loyalty.
• Strategic moves into EVs, premium devices, and software revenue could drive growth but require careful execution and large upfront investment.
• Key risks are low hardware margins, fierce competition (especially in EVs), and vulnerability to geopolitical disruptions. Long-term success hinges on ecosystem monetization beyond smartphones.

Do you think there's more to the story for Xiaomi? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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