Ren
Head of AI, Ex-Product Manager, AI Supply-Chain Bottlenecks
AXT sits beneath the whole AI interconnect layer because indium phosphide is its floor, so it does not need any single transceiver vendor to win. Coherent reported InP laser production up about 80% YoY with bookings into calendar 2028, and Lumentum guided to about 40% operating margins with capacity up 50% in the second half. Nobody books into 2028 unless the substrate is the worry. AXT is tripling InP capacity by end-2026 and doubling again in 2027. x.comÂ
AXT is one of the charts highlighted as a long in the weekend newsletter, alongside Applied Optoelectronics. x.comÂ
AXT looks good on the dip because its blowout quarter has de-risked the stock. x.comÂ
AXT's permit-backed Q4 outlook weakens the near-term operating objection to the Sell case. Q3 revenue reached $73.4M at 56% GAAP gross margin; management guides to about $90M in Q4 from business permitted or not needing permits. InP contributed $54.3M and backlog exceeds $500M, though much spans years. The remaining test is whether 2027 capacity becomes qualified, permitted shipments at durable margins. x.com x.com x.comÂ
AXT holds a critical-materials monopoly hiding in plain sight, because AI needs fiber, fiber needs lasers and lasers need indium phosphide. The stock is volatile. x.comÂ
AXT could double if its inverse head-and-shoulders pattern completes. It sits in the semicap space that benefits from hyperscalers' new capex, and strong call flow today adds support. x.comÂ
AXT's new public offering should push the stock down. x.comÂ
AXT makes the indium phosphide substrates needed for high-speed data center connectivity, making it an AI infrastructure and optical connectivity play. EPS is expected to grow from $0.86 in 2026 to $3.29 by 2028, nearly 4x in two years. The chart is building the right side of a cup base. x.comÂ
AXT is a speculative add on the market's sharp drop, because indium phosphide wafer prices have reportedly risen a lot lately. x.comÂ
AXT's roughly $9B valuation can't be justified by its fundamentals. Even if revenue grows fivefold from $80M to $400M next year, EBIT would still be below $150M, which doesn't support an enterprise value of $9B or even $5B. Beyond short covering, it's hard to see anyone owning AXT at even half today's valuation, despite @aleabitoreddit's view that its indium phosphide substrates are a bottleneck whose contracts predate price hikes. x.com x.comÂ
AXT is trying to break higher, with heavy August call buying seen yesterday. x.comÂ