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1. Company Snapshot

1.a. Company Description

AXT, Inc.designs, develops, manufactures, and distributes compound and single element semiconductor substrates.It produces semiconductor substrates using its proprietary vertical gradient freeze technology.


The company offers indium phosphide for use in data center connectivity using light/lasers, 5G communications, fiber optic lasers and detectors, passive optical networks, silicon photonics, photonic integrated circuits, terrestrial solar cells, RF amplifier and switching, infrared light-emitting diode (LEDS) motion control, lidar for robotics and autonomous vehicles, and infrared thermal imaging.It also provides semi-insulating gallium arsenide (GaAs) substrates for use in Wi-Fi and IoT devices, transistors, direct broadcast television, power amplifiers, satellite communications, and solar cells; and semi-conducting GaAs substrates that are used in LED, screen displays, printer head lasers and LEDs, 3-D sensing using VCSELs, data center communication using VCSELs, sensors for industrial robotics/near-infrared sensors, optical couplers, solar cells, night vision goggles, lidar for robotics and autonomous vehicles, and other lasers, as well as laser machining, cutting, and drilling.In addition, the company offers germanium substrates for use in multi-junction solar cells for satellites, optical sensors and detectors, terrestrial concentrated photo voltaic cells, infrared detectors, and carrier wafer for LED.


Further, it provides 6N+ and 7N+ purified gallium, boron trioxide, gallium-magnesium alloy, pyrolytic boron nitride (pBN) crucibles, and pBN insulating parts.AXT, Inc.sells its products through direct salesforce in the United States, China, and Europe, as well as through independent sales representatives and distributors in Japan, Taiwan, Korea, and internationally.


The company was formerly known as American Xtal Technology, Inc.and changed its name to AXT, Inc.in July 2000.


AXT, Inc.was incorporated in 1986 and is headquartered in Fremont, California.

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1.b. Last Insights on AXTI

AXT, Inc.'s recent performance was driven by a series of positive developments. The company's Q1 2025 earnings release showed a loss of $0.20 per share, missing analysts' consensus estimates of a loss of $0.13 by $0.07. However, the company's revenue topped estimates, indicating a strong demand for its compound semiconductor substrates. Additionally, several institutional investors, including Point72 Asset Management L.P. and Pacific Ridge Capital Partners LLC, increased their stakes in the company during the fourth quarter.

1.c. Company Highlights

2. AXT's Q3 2025 Earnings: Strong Revenue Growth Driven by Indium Phosphide Demand

AXT reported a revenue of $28.0 million for the third quarter of 2025, representing a 56% sequential increase and an 18% year-over-year growth, primarily driven by the strong demand for indium phosphide substrates from data center applications. The non-GAAP gross margin improved to 22.4%, and the operating loss narrowed to $384,000. The company reported a non-GAAP net loss of $1.2 million, or $0.03 per share, which beat estimates of $-0.11 EPS. Revenue breakdown by product category showed indium phosphide at $13.1 million, gallium arsenide at $7.5 million, and germanium substrates at $640,000.

Publication Date: Nov -30

📋 Highlights
  • Revenue Growth:: Q3 revenue rose 56% sequentially to $28.0M, driven by 50%+ surge in indium phosphide (IP) substrates to $13.1M.
  • Backlog Expansion:: IP backlog reached $49M, with customers placing long-term orders, and current capacity at ~$20M/quarter.
  • Gross Margin Improvement:: Non-GAAP gross margin increased to 22.4%, with targets to exceed 30% via higher IP utilization and production efficiencies.
  • Export Permit Challenge:: 60-day processing delays for permits remain a key bottleneck, limiting Q4 revenue to $27–$30M despite $13M in pending materials.
  • Capacity Expansion Plans:: $10–15M in CapEx required to double IP capacity in 9 months, with 25% increases achievable in 3 months via additional furnaces.

Indium Phosphide Backlog and Export Permits

The indium phosphide backlog has grown significantly to $49 million, with customers placing longer-term orders and providing greater visibility into their needs. However, export permits remain a gating factor for growth, with the current processing time taking approximately 60 business days. The company guided $27-30 million in shipments for the fourth quarter, limited by the permitting process.

Revenue Growth and Capacity Expansion

AXT's revenue growth is attributed to a multiyear cycle driven by demand for indium phosphide, particularly in the AI data center space. The company estimates current indium phosphide capacity at around $20 million per quarter and plans to double capacity in about 9 months with $10-15 million in CapEx. A 25% increase in capacity can be achieved within 3 months by bringing more furnaces online.

Valuation and Growth Prospects

Analysts estimate next year's revenue growth at 32.3%. With a P/S Ratio of 5.52 and EV/EBITDA of -24.18, the market has priced in significant growth expectations. The company's ROE is -12.38%, and ROIC is -8.24%. As demand continues to grow, driven by AI connectivity in optical transceivers and CPOs, AXT is poised to capitalize on the increasing need for indium phosphide. The company's ASPs for indium phosphide are holding firm, and some high-end products are seeing ASP increases.

Path to Profitability

AXT aims to improve gross margin through better product mix and efficiencies on the production line, targeting over 30% gross margin by increasing utilization of their indium phosphide line. Higher volumes will help carry fixed assets properly, and improving line efficiencies will contribute to margin growth. The goal is to return to a similar profitability level as 2-3 years ago, when revenue was in the high 20s and gross margin was in the high 20s to low 30s percent.

3. NewsRoom

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AXT to Participate in the Northland Securities Growth Conference

Dec -02

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Top 2 Tech Stocks That May Crash This Month

Nov -05

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What Makes AXT (AXTI) a Strong Momentum Stock: Buy Now?

Nov -03

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AXT, Inc. (AXTI) Q3 2025 Earnings Call Transcript

Oct -30

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AXT (AXTI) Reports Q3 Loss, Tops Revenue Estimates

Oct -30

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AXT, Inc. Announces Third Quarter 2025 Financial Results

Oct -30

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AXT (AXTI) Soars 17.0%: Is Further Upside Left in the Stock?

Oct -27

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AXT, Inc. Schedules Third Quarter 2025 Earnings Release for October 30, 2025

Oct -08

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.77%)

6. Segments

Substrates

Expected Growth: 8.43%

AXT's substrate segment growth is driven by increasing demand for 5G and IoT devices, adoption of GaN and GaAs technologies, and rising production of electric vehicles. Additionally, AXT's strategic partnerships, capacity expansions, and cost reductions contribute to its growth momentum, resulting in an 8.43% growth rate.

Raw Materials and Others

Expected Growth: 9.33%

AXT, Inc.'s 9.33% growth in Raw Materials and Others is driven by increasing demand for semiconductor materials, particularly in the gallium arsenide and indium phosphide markets. Additionally, the company's strategic expansion into new markets, such as 5G and IoT, has contributed to the growth. Furthermore, AXT's efforts to improve operational efficiency and reduce costs have also positively impacted the segment's performance.

7. Detailed Products

InP-Based Optical Semiconductor Products

AXT's InP-based optical semiconductor products are designed for high-speed data transmission and reception in optical communication systems.

GaAs-Based Optical Semiconductor Products

AXT's GaAs-based optical semiconductor products are designed for high-power and high-frequency applications.

InGaP-Based Optical Semiconductor Products

AXT's InGaP-based optical semiconductor products are designed for high-power and high-efficiency applications.

Germanium (Ge) Substrates

AXT's Germanium (Ge) substrates are designed for high-performance and high-power applications.

Indium Phosphide (InP) Substrates

AXT's Indium Phosphide (InP) substrates are designed for high-speed and high-frequency applications.

Gallium Arsenide (GaAs) Substrates

AXT's Gallium Arsenide (GaAs) substrates are designed for high-power and high-frequency applications.

8. AXT, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for AXT, Inc. is medium due to the availability of alternative semiconductor materials and technologies.

Bargaining Power Of Customers

The bargaining power of customers for AXT, Inc. is low due to the company's strong relationships with its customers and the lack of buyer concentration.

Bargaining Power Of Suppliers

The bargaining power of suppliers for AXT, Inc. is medium due to the presence of multiple suppliers and the company's ability to negotiate prices.

Threat Of New Entrants

The threat of new entrants for AXT, Inc. is high due to the relatively low barriers to entry in the semiconductor industry and the potential for new competitors to emerge.

Intensity Of Rivalry

The intensity of rivalry for AXT, Inc. is high due to the competitive nature of the semiconductor industry and the presence of established competitors.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 21.46%
Debt Cost 3.95%
Equity Weight 78.54%
Equity Cost 15.37%
WACC 12.92%
Leverage 27.32%

11. Quality Control: AXT, Inc. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Amtech Systems

A-Score: 4.4/10

Value: 7.1

Growth: 4.7

Quality: 3.8

Yield: 0.0

Momentum: 9.0

Volatility: 1.7

1-Year Total Return ->

Stock-Card
nLIGHT

A-Score: 4.1/10

Value: 6.4

Growth: 2.6

Quality: 4.3

Yield: 0.0

Momentum: 9.5

Volatility: 2.0

1-Year Total Return ->

Stock-Card
Aehr Test

A-Score: 4.1/10

Value: 6.2

Growth: 3.3

Quality: 4.5

Yield: 0.0

Momentum: 9.5

Volatility: 1.0

1-Year Total Return ->

Stock-Card
AXT

A-Score: 3.9/10

Value: 8.0

Growth: 0.8

Quality: 4.2

Yield: 0.0

Momentum: 9.5

Volatility: 1.0

1-Year Total Return ->

Stock-Card
CEVA

A-Score: 3.6/10

Value: 6.8

Growth: 1.4

Quality: 4.5

Yield: 0.0

Momentum: 6.0

Volatility: 3.0

1-Year Total Return ->

Stock-Card
MaxLinear

A-Score: 3.5/10

Value: 7.2

Growth: 0.6

Quality: 4.7

Yield: 0.0

Momentum: 6.5

Volatility: 2.3

1-Year Total Return ->

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

11.58$

Current Price

11.58$

Potential

-0.00%

Expected Cash-Flows