I. Xiaomi's Stock Price Fluctuates at Low Levels

Currently, Xiaomi's intraday stock price is 33, continuing to fluctuate at low levels. The reasons are actually quite clear; just look at the firsthand information from President Lu in the 2025 earnings call:

• Lu Weibing: "As everyone can see, the gross margin of our smartphones in the fourth quarter was indeed directly challenged by the sharp rise in memory prices. The current increase in memory chip prices has exceeded the industry's previous expectations, which is a cost pressure faced by the entire industry."
• Lu Weibing: "We chose to absorb this cost through deep integration of the supply chain, rather than simply passing the pressure on to consumers. Although this squeezed Q4's net profit by about 25% in the short term, we believe maintaining market share and user stickiness is more important at this stage."
• Lu Weibing: "The 'trade-in' subsidy policy in the second half of 2025 greatly boosted the home appliance category. However, in the fourth quarter, the phased tapering of the policy and the early release of prior demand led to a certain degree of growth slowdown in the IoT business in Q4."
• Lu Weibing: "The profit fluctuation in Q4 is 'technical.' We still insist on high-intensity R&D investment, especially in the fields of AI large models and robotics. A significant portion of the full-year 2025 R&D expenditure of 33.1 billion yuan was reflected in the concentrated settlement in the fourth quarter. Our goal of achieving comprehensive profitability for the 'Human x Car x Home' ecosystem in 2026 remains unchanged."

So there's no need to guess or worry. The recent stock price is mainly because Xiaomi is experiencing the common cyclical impact of the industry.

II. Observations on Other Stocks Over the Past Year

Since Xiaomi's continuous decline last year, considering the psychological pressure, I was forced to reduce the frequency of watching the market. However, after truly experiencing this year, the feeling is completely different from just watching for a few hours, days, or months back then:

• Nasdaq and S&P: Made money the year before last. From last year to this year, Trump's series of actions caused significant volatility. Hard to say, need longer-term observation to have an objective conclusion.
• U.S. Dividend Stock Index: Impressive. When tech was active mid-last year, it was around 27, 'stagnant.' Now it's quite stable at 30, and there's also a dividend. But whether the price of 30 is worth buying is another logic.
• Coca-Cola: Rose from a stagnant 60 to 75, with dividends, simple business, Buffett's favorite.
• Google: Was lucky to catch Google in the 100s last year. Bought because of unwavering belief in Google's product power, technology, and team; sold just in time for a rally brought by the phased end of the antitrust investigation. At that time, Xiaomi's decline was significant, so I added to my Xiaomi position.
• Apple: From 200 to 250. At that time, the frosted glass system was released, AI progress was surprisingly slow, but ecosystem capabilities and product pricing power remained.
• Tesla: Watched it from the 100s to the 400s. Back then, with insufficient experience, I really couldn't hold on after buying. The stock price was like an EKG, and I actually lost some money.
• Microsoft: Watched it from 400 to 500, then fell to the 300s. It was truly soft; software stocks were significantly affected under the AI trend.
• Figma: Watched it from 80 to 20. Many thought it was cheap and wanted to sweep up. I didn't understand and didn't dare to enter. Now, with Stitch out, it's adding insult to injury.
• Duolingo: Watched it from over 500 to 100. Even though there were gains in the first half of the year, the true situation was only revealed at the end.
• Cloudflare: A real dark horse. From 100 to over 200 now. Few understand it, little discussion, liquidity isn't great, but it's truly making quiet money. Back then, with little experience and unable to withstand short-term volatility, I bought in the 100s, didn't make money, and withdrew.

III. Revisiting Why I Hold Xiaomi

First, looking at the past year, unlike focusing on stock price fluctuations, the two most concerning nodes for my holdings in the past year were: one, whether Xiaomi's first car last year had serious quality issues; the other, whether Xiaomi would become a mere distribution channel if it made no progress in AI in the second half of last year. Fortunately, after verification over this year, it's proven that Xiaomi has indeed done well in these two areas, both firmly in the first tier.

From the changes domestically and overseas last year and this year, it can be seen that Xiaomi not only hasn't been defeated but has instead formed a complete closed loop of "software + hardware + manufacturing" in its industrial layout. Its public relations and overseas market structure are healthier, with stronger shock resistance and better brand power. Everything is developing in a more stable direction. In contrast, some companies from the same period weren't so lucky. You can see some manufacturers with only mobile phone businesses have quietly exited under this wave of cyclical tides.

Looking at other giants, in this era of AI and robotics development, I find that Tesla only has cars in the market, lacking embodied devices like phones; Apple happens to not have cars; and pure AI software companies lack stable landing scenarios and face fierce competition. In the long run, it's hard to say who will have the last laugh.

If holding Xiaomi last year was mainly emotional, this year it's more objective: believing in this team's strategic determination and pragmatic, low-key execution, and also believing in the potential and resilience brought by a more complete industrial layout. It has first-tier software and hardware, as well as core manufacturing capabilities, demonstrating strong resilience and potential. Plus, with Xiaomi's current P/E ratio under 20, I'm quite at ease.

III. Other

From my personal perspective, holding Xiaomi was the right stock selection. At least the things I worried about didn't happen; instead, they strengthened the fundamentals. The main losses came from emotional chasing of fluctuations and insufficient experience in position management in the early stages.

Some say I'm a stock shill. Actually, I started heavily investing in Xiaomi last year. My current return rate can instead remind everyone: "The stock market has risks; investment requires caution." Choosing the right target is important, but it's also crucial to closely monitor the "current price" and "position management." Not doing enough in these two areas, my return rate is a lesson from the past. If these two aspects can be done well, I believe the investment return curve would be much more stable.

$XIAOMI-W(01810.HK)