On August 12, AXT Inc rose 12.54% in regular trading, trading at $77.8/share, with turnover of $142 million. The stock extended its pre-market gains as the market continued to price in the company's Q2 earnings inflection and indium phosphide supply-demand tightness.

On the news front, AXT reported Q2 revenue of $47.59 million, far exceeding the consensus estimate of $34.09 million, while adjusted EPS of $0.19 beat expectations by 171%. Indium phosphide substrate quarterly revenue reached a record $30.7 million, with adjusted gross margin surging to 45.0% from 8.2% a year ago. Management characterized the quarter as a business inflection point. The company has signed long-term supply agreements with Coherent and Lumentum, with InP backlog exceeding $100 million.

At the industry level, the global indium phosphide substrate supply-demand gap exceeds 70%, with NVIDIA projecting demand to surge 20x over five years. Wedbush maintains an outperform rating, noting AI data center demand remains in early stages.

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