NEW YORK, July 30, 2026, 17:58 EDT — Nasdaq’s regular session is closed; after-hours trading remains open.
- AXT gained 27.0% to $46.94, then rose 23.9% after hours to $58.15.
- Revenue beat consensus by 39.6%. Adjusted earnings nearly tripled the estimate.
- Third-quarter sales guidance stood 70.1% above the pre-call consensus estimate.
AXT shares surged after the compound-semiconductor supplier delivered a broad second-quarter beat. The two-stage rally left them 57.3% above Wednesday’s close.
The sharper investor signal came from margin conversion. Revenue increased by $20.7 million from the first quarter. Gross profit rose by $13.4 million.
That equals a 64.8% incremental gross margin. Operating profit improved by $12.0 million, implying a 58.1% incremental operating margin. Those calculations use AXT’s reported quarterly and six-month figures.
The quarter’s main comparisons follow. First-quarter operating income is derived from the six-month statement.
| Metric | Q2 2026 actual | Street estimate | Q1 2026 | Q2 2025 |
|---|---|---|---|---|
| Revenue | $47.59 million | $34.08 million | $26.92 million | $17.97 million |
| Adjusted EPS | $0.19 | $0.07 | -$0.01 | -$0.15 |
| GAAP gross margin | 44.9% | — | 29.6% | 8.0% |
| GAAP operating income | $10.42 million | — | -$1.59 million | -$6.75 million |
Gross margin widened by 15.3 percentage points sequentially. Operating margin swung to 21.9% from negative 5.9%. The leverage is real.
Chief Executive Morris Young said AXT had “reached an inflection point in our business.” He cited data-center optical demand, added capacity and better factory productivity. AXT also recorded its highest quarterly indium-phosphide revenue. Business Wire
Management then raised the bar sharply. The company guided third-quarter revenue to exactly $66 million. Adjusted earnings should reach 30 to 32 cents per share.
| Q3 metric | Company guidance | Pre-call consensus estimate | Gap at midpoint |
|---|---|---|---|
| Revenue | $66.00 million | $38.80 million | +70.1% |
| Adjusted EPS | $0.30-$0.32 | $0.11 | +181.8% |
| GAAP EPS | $0.29-$0.31 | $0.09 | +233.3% |
The sales guide also implies 38.7% sequential growth. At that level, quarterly revenue would run at $264 million annualized. That is a run-rate calculation, not an annual forecast.
Demand visibility gained further support from a customer agreement announced Wednesday. AXT signed a six-year capacity reservation with Lumentum Holdings NASDAQ:LITE. The deal covers indium-phosphide wafer substrates.
| Lumentum agreement item | Amount or term | Equivalent to Q2 revenue |
|---|---|---|
| Initial deposit | $43.5 million | 91.4% |
| Second deposit | $43.5 million | 91.4% |
| Stated total deposits | $87.0 million | 182.8% |
| Capacity-reservation term | Six years | — |
Timing and terms for the second deposit will be determined during 2028.
The deposits will become credits against future shipments. They are not immediate revenue. Still, the initial payment’s scale signals a substantial capacity commitment.
Profit quality requires a closer look. AXT generated $10.4 million of operating income, but net interest income added $4.7 million. That interest contribution represented 31.2% of pretax profit.
| Financial check | Q2 2026 | Comparison |
|---|---|---|
| Operating income | $10.42 million | -$1.59 million in Q1 |
| Net interest income | $4.73 million | 31.2% of pretax income |
| Diluted share count | 63.47 million | +45.2% year over year |
| Cash and investments | $715.80 million | $84.23 million short-term loans |
Cash and investments exclude restricted cash.
Demand is strong, but supply remains geopolitical. China has restricted indium-phosphide export licences since February 2025. AXT manufactures most of its InP substrates there. SemiAnalysis analyst Konrad Wang called InP “one of several supply chain bottlenecks collectively gating AI data centre buildouts.” Reuters
Risks: Export-permit timing remains outside AXT’s control. The company must convert added capacity into permitted shipments. The 45% share-count increase also reduces per-share operating leverage.
Friday’s regular session will test the repricing. The next proof points are permit throughput, shipped revenue and gross-margin durability.
