Moody
Equity Investor, Semiconductor Research
European AI supply chain stocks are being re-priced and it is still early, with Nynomic a much cheaper way than Aixtron to play the same supply chain. Money is rotating from US photonics toward European names that trade at a fraction of their peers' valuations, creating asymmetric upside. x.comÂ
AXT looks good on the dip because its blowout quarter has de-risked the stock. x.comÂ
AIXTRON reaching meme status is just a matter of time, because over 90% share in indium phosphide equipment, per @jasonschips, combined with pricing power across both optics and power semiconductors exists nowhere else. x.comÂ
ASML's valuation does not make sense at 45-50x forward earnings unless estimates are too low by around 2x. It has always had pricing power but chosen not to exercise it; that may change, but if it does not, the multiple is hard to justify relative to other opportunities. x.com x.comÂ
Aixtron is a mispriced European AI photonics play: it holds over 90% of the market for the MOCVD reactors that grow the indium phosphide crystals used in AI data center lasers, so every laser in Nvidia or Broadcom optical transceivers starts in its machines. Customers include Coherent, Lumentum, Nokia/Infinera and SMART Photonics, and laser lead times stretch past 2027. Despite a significant re-rating, it trades at 38x EV/EBITDA versus 84x for peers like BESI. x.comÂ
Aixtron and Veeco stand to benefit because indium phosphide is the real bottleneck in optical interconnect, one nothing else can replace. InP looks set to stay structurally short in both demand and supply over the next three to five years, a theme the market has not yet fully priced, which makes both equipment makers attractive. x.com x.comÂ
Aixtron's indium phosphide business is grossly under-modeled, as MOCVD machines may become the gating factor for scaling co-packaged optics. It holds 90%+ share in InP, a rare monopoly in optics and power chips. GaN and SiC markets will reach tens of billions and capacity will run out once new data centers adopt 800V DC, so even a fraction of that in MOCVD demand means billions of revenue for a $6 billion company. CPO and 800V DC each have three ramp phases, each half an order larger. x.comÂ
Aixtron is a decent proxy play on photonics because it basically has a monopoly on its indium phosphide equipment, while the photonics names are capacity constrained and InP remains an ongoing bottleneck. x.comÂ
Aixtron's position is durable but not unconstrained, with optical lasers carrying the near-term case: it holds over 90% of InP MOCVD and every high-speed laser traces back to its reactors. Its share will likely erode toward 65-75% by decade-end as Veeco improves and Chinese buyers diversify, manageable if the InP tool market doubles or triples. The bigger near-term limit is capacity, as Aixtron reallocates existing lines rather than adding aggressively. 800V DC power demand looks further off. … Show more