AXT (NASDAQ:AXTI) Issues Quarterly Earnings Results

AXT (NASDAQ:AXTI) released its earnings results on Thursday. The semiconductor company reported $0.41 EPS for the quarter, topping the consensus estimate of $0.31 by $0.10, FiscalAI reports. AXT had a return on equity of 6.35% and a net margin of 18.53%. The firm had revenue of $73.41 million during the quarter, compared to analysts’ expectations of $66.00 million.

Here are the key takeaways from AXT’s conference call:

• Q3 revenue surged 162% year over year to $73.4 million, while non-GAAP net income rose to $26.8 million, or $0.41 per diluted share, from $11.9 million in Q2. Gross margin expanded to 56.1%, driven by higher volume, favorable product mix, pricing, and larger wafer sizes.
• Demand for indium phosphide substrates continues to outpace supply, with backlog exceeding $500 million and all customers reportedly on allocation. Management said capacity additions are progressing faster than planned, expects Q4 non-GAAP EPS of $0.57-$0.59, and believes gross margin could exceed 60% next quarter.
• A $43.5 million wafer prepayment from Lumentum under a long-term supply agreement boosted cash and supports expanded indium phosphide production. AXT also expects 4-inch laser substrates and 6-inch pilot production to provide additional revenue and productivity gains in 2027.
• Tongmei agreed to raise up to $545 million in private equity financing to fund indium phosphide and raw-material capacity expansion, while AXT expects to retain approximately 73.4% ownership. The transaction advances Tongmei’s planned Hong Kong listing but will reduce AXT’s ownership by roughly 12.1%.
• Management highlighted continuing risks from export permits, tariffs and trade restrictions, as well as potential raw-material cost increases and seasonal weakness in portions of the gallium arsenide business. Executives remain confident about 2027-28 demand but acknowledged that supply-demand conditions several years out are less certain.

AXT Stock Performance

Shares of NASDAQ:AXTI opened at $55.06 on Friday. The stock has a market cap of $3.61 billion, a PE ratio of 122.36 and a beta of 1.86. AXT has a one year low of $7.80 and a one year high of $143.16. The business’s fifty day moving average price is $66.26 and its two-hundred day moving average price is $64.07.

Wall Street Analyst Weigh In

A number of equities research analysts have commented on AXTI shares. Needham & Company LLC raised shares of AXT from a “hold” rating to a “buy” rating and set a $90.00 price objective on the stock in a research report on Friday, July 31st. UBS Group set a $90.00 price objective on AXT in a research note on Friday, July 31st. Zacks Research downgraded shares of AXT from a “strong-buy” rating to a “hold” rating in a research note on Tuesday, September 29th. Weiss Ratings upgraded shares of AXT from a “sell (d-)” rating to a “sell (d+)” rating in a research report on Friday, August 14th. Finally, B. Riley Financial increased their target price on AXT from $55.00 to $56.00 and gave the stock a “neutral” rating in a research note on Friday. Three investment analysts have rated the stock with a Buy rating, two have given a Hold rating and one has issued a Sell rating to the company’s stock. Based on data from MarketBeat.com, the company has an average rating of “Hold” and a consensus target price of $77.80.

More AXT News

Here are the key news stories impacting AXT this week:

• Positive Sentiment: AXT reported third-quarter adjusted EPS of $0.41, surpassing the $0.31 consensus estimate, while revenue of $73.4 million exceeded expectations of approximately $66 million. Revenue increased 162% year over year, helped by record indium phosphide (InP) sales. AXTI Q3 Earnings Beat on Record InP Sales and Margin Gains
• Positive Sentiment: Management cited strong artificial-intelligence data-center demand, a backlog exceeding $500 million and surging InP requirements. AXT plans aggressive capacity expansion and indicated stronger fourth-quarter expectations, supporting the longer-term growth outlook. AXTI Q3 Earnings Call Highlights AI Demand and Capacity Expansion
• Positive Sentiment: Profitability improved sharply: GAAP gross margin reached approximately 56%, versus 44.9% in the prior quarter and 22.3% a year earlier, while GAAP diluted EPS rose to $0.39 from $0.17. Wedbush also praised AXT’s management following the results. AXT in focus as Wedbush likens management to Jaws hero after strong results
• Neutral Sentiment: B. Riley raised its price target modestly to $56 from $55 but maintained a Neutral rating, indicating limited near-term upside at recent trading levels. B. Riley Financial Ratings
• Negative Sentiment: The decline appears partly driven by profit-taking and risk reduction ahead of earnings after a sharp momentum rally. The stock’s high valuation, semiconductor volatility and sensitivity to export permits and China-related approvals may be prompting investors to lock in gains. AXT Falls as Investors Appear to Take Profits Ahead of Earnings
• Negative Sentiment: Reported insider activity shows 16 open-market sales and no purchases during the past six months, a potential supply and confidence concern for investors.

Insider Activity at AXT

In other news, Director Leonard Leblanc sold 4,000 shares of AXT stock in a transaction dated Monday, August 17th. The shares were sold at an average price of $96.07, for a total transaction of $384,280.00. Following the completion of the sale, the director directly owned 113,129 shares in the company, valued at $10,868,303.03. The trade was a 3.42% decrease in their ownership of the stock. The sale was disclosed in a filing with the SEC, which is available through the SEC website. 5.97% of the stock is currently owned by company insiders.

AXT Company Profile

AXT, Inc develops and manufactures compound semiconductor substrates used as the foundation for various high-performance electronic and optoelectronic devices. Its principal products include gallium arsenide (GaAs), indium phosphide (InP), and germanium substrates, along with other specialty materials such as gallium antimonide and indium arsenide.

The company’s substrates are used in applications including wireless communications, fiber-optic and data-center networks, lasers, light-emitting diodes, solar cells, consumer electronics, and aerospace and defense systems.