Dr. Stoxx
Stock Trader & Author, Oxford DPhil, Trading Education
AXT is back in favor among semiconductor-equipment plays after strong earnings and a new indium phosphide deal with Lumentum. It blew out its earnings, and its backlog now exceeds $100M. The stock is testing its 200-day moving average, a level from which tech trades have worked well recently. x.comÂ
AXT is one of the charts highlighted as a long in the weekend newsletter, alongside Applied Optoelectronics. x.comÂ
AXT is trying to break higher, with heavy August call buying seen yesterday. 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 is among the high-growth companies likely to beat 5.2% bond yields: revenue rose 164% year on year and 77% sequentially, and it swung to a profit. As @BULLOFBRITAIN notes, the market is offering 100% growers at a 40% discount because investors want to lock in bond yields. 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's new public offering should push the stock down. 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 sits in the optical upstream, where surging AI compute demand meets supply that cannot be built fast enough. Amazon raised 2026 capex to $220B and said even that won't meet demand, with 2027 also short. AXT posted record revenue of $47.6M, up 164% year over year, record indium phosphide revenue of $30.7M and 45% margins targeting 50%+, and is doubling capacity in both 2026 and 2027 yet still can't keep up. 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 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