AXT Inc's stock soared 5.70% in pre-market trading on Wednesday, continuing its strong upward trajectory.
The movement is driven by 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. The broader optical communication sector also showed strength in pre-market trading, contributing to the positive momentum.