AXT Inc's stock experienced a pre-market soar of 5.17% on Wednesday, continuing its strong upward momentum.
The movement is attributed to the company's recent earnings beat and surging demand for its indium phosphide (InP) substrates, which are critical components for AI-related optical communication infrastructure. AXT benefits from a significant supply-demand imbalance in the market, with a global shortfall exceeding 70% for InP wafers, positioning the company as a primary source of incremental global supply.
With competitors facing export control constraints and limited expansion plans, AXT's strategy to double its production capacity annually through 2028 and its estimated 30% annual pricing power are key drivers behind the stock's continued strength and new record highs.