NEW YORK, July 31, 2026, 06:06 EDT — AXT NASDAQ:AXTI shares soared 27% after the company posted record indium phosphide sales, resulting in a boost to its gross margin.
- AXT was at $59.60 ahead of Friday’s market open, marking a 27.0% rise from where it closed on Thursday. The main Nasdaq session was still shut.
- Revenue for the second quarter increased by 165% to $47.6 million. GAAP gross margin improved to 44.9%, up from 8.0% in the previous year.
- An initial estimate shows incremental gross margin at 64.8%. Meanwhile, the premarket surge raised the projected enterprise value to 12.4 times annualised third-quarter revenue.
AXT, Inc. NASDAQ:AXTI shares were quoted at $59.60 ahead of the market open on Friday, up 27.0% from the previous session’s close at $46.94. Nasdaq trading had not yet started.
AXT announced results after Thursday’s market close. The stock had risen 27% over the course of that day’s session. Combined, these increases pushed AXT up 61% compared to its Wednesday close.
The key operational surprise was found in gross profit. Revenue climbed by $20.7 million from the first quarter, while gross profit was up $13.4 million.
This suggests an incremental gross margin of 64.8%. Put differently, almost 65 cents from every extra dollar in sales contributed to gross profit. The figure is based on AXT’s published quarterly numbers.
| Operating measure | Q2 2026 | Q1 2026 | Q2 2025 |
|---|---|---|---|
| Revenue | $47.6 million | $26.9 million | $18.0 million |
| GAAP gross margin | 44.9% | 29.6% | 8.0% |
| GAAP net income/(loss) | $11.1 million | $(1.6) million | $(7.0) million |
| Non-GAAP EPS | $0.19 | $(0.01) | $(0.15) |
Revenue rose 165% from the previous year. GAAP operating income stood at $10.4 million, turning around from a loss of roughly $1.6 million in the first quarter. Some of that gain was offset by dilution.
The quarter and executives’ forecast for the third quarter both surpassed consensus projections by significant margins. The consensus figures listed below were compiled by Google Finance and MarketBeat.
| Measure | Result or outlook | Published consensus | Difference |
|---|---|---|---|
| Q2 revenue | $47.59 million | $34.08 million | +39.6% |
| Q2 non-GAAP EPS | $0.19 | $0.07 | +$0.12 |
| Q3 revenue outlook | Approximately $66 million | $38.7 million | +70.5% |
| Q3 non-GAAP EPS outlook | $0.30-$0.32 | $0.10 | +$0.20-$0.22 |
AXT’s Chief Financial Officer Gary Fischer stated the company holds a “high degree of confidence” that it will reach approximately $66 million in third-quarter revenue, a target possible with its current export permits. The figure could increase further if additional permits are approved, but executives said the timeline for such approvals remains uncertain. The Motley Fool
AXT CEO Morris Young described the outcome as AXT’s “highest quarterly indium phosphide revenue to date.” The company’s leadership reported that its order backlog surpassed $100 million, stretching as far out as 2027. AXT, Inc.
AXT aims for a quarterly indium phosphide revenue capacity of $60 million by late 2026, with projections rising to $130 million by late 2027. Company executives noted that customer demand is currently outpacing existing capacity.
Customer financing boosts backing. Coherent Corp. NYSE:COHR signed a three-year supply agreement for six-inch indium phosphide substrates, featuring a $22.3 million advance payment.
Lumentum Holdings Inc. NASDAQ:LITE, via one of its operating units, has secured six years’ worth of capacity. The deal involves an upfront deposit of $43.5 million, with an additional payment scheduled in 2028.
The deposits help ease financing strain, though they do not count as revenue. Each agreement includes protections for customers if AXT fails to meet specific capacity or delivery commitments.
The surge boosted implied equity value by about $828 million. This initial calculation is based on 65.42 million shares and net unrestricted cash and investments totaling $631.6 million. Restricted cash was not included.
| Preliminary valuation measure | Thursday close | Friday premarket |
|---|---|---|
| Share price | $46.94 | $59.60 |
| Implied equity value | $3.07 billion | $3.90 billion |
| Estimated enterprise value | $2.44 billion | $3.27 billion |
| EV/annualised Q3 revenue forecast | 9.2 times | 12.4 times |
| EV/annualised projected 2027 year-end InP capacity | 4.7 times | 6.3 times |
The 12.4-times metric demands continued growth past a single robust quarter. In contrast, the 6.3-times measure is based on AXT reaching its projected 2027 capacity. That capacity figure does not represent revenue guidance.
AXT experienced notable swings over the past week, ending at $47.23 on July 24 before dropping to $36.97 by Wednesday. In premarket trading on Friday, shares traded 26.2% higher than the July 24 close, yet still stood 58.4% beneath the 52-week peak.
Risks: Timing for export permits may restrict short-term gains. Customer agreements include refund clauses, and AXT is required to carry out significant capacity growth. The average number of diluted shares in Q2 reached 63.5 million, a 45% increase from a year earlier, following a $632 million equity sale.
In the coming week, investors will focus on permit updates, order conversions and any changes to estimates. Tim Savageaux of Northland reaffirmed his Buy recommendation and $125 price target on Thursday. Friday’s opening volume will be in focus: premarket trading was about 453,000 shares, compared with 18.6 million shares during Thursday’s session.
