On August 17, AXT Inc rose 5.08% overnight, trading at $85.76/share, with turnover of $11.33 million. The stock extends its post-earnings recovery trajectory as the market continues to price in the indium phosphide (InP) supply-demand imbalance and Q2 business inflection.

AXT reported Q2 adjusted EPS of $0.19, crushing the consensus estimate of $0.07 by over 171%. Revenue surged to $47.6 million versus expectations of $34.1 million, representing 165% year-over-year growth. InP substrate revenue reached a record $30.7 million in the quarter, while adjusted gross margin leapt to 45.0% from 8.2% a year earlier. Management characterized the quarter as a structural inflection point driven primarily by data center applications rather than a one-time step-up.

On the industry side, global InP substrate supply-demand gap exceeds 70%, with NVIDIA forecasting a 20x demand surge over the next five years. Wedbush maintained its outperform rating, noting AXT's leadership in IP, manufacturing capacity, and technical capability positions it to capitalize on the AI-driven opportunity still in early innings. Analysts' mean price target stands at $96.50.

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