On August 12, AXT Inc rose 8.02% in pre-market trading, trading at $80.0/share, with turnover of $4.7848 million. The stock is extending its post-selloff recovery following a sharp pullback on August 10 when optical communication stocks broadly declined.

The rebound is driven by the continued digestion of the company's blockbuster Q2 results and structural indium phosphide supply tightness. AXT reported Q2 revenue of $47.59 million, far exceeding the $34.09 million consensus, while adjusted EPS of $0.19 beat estimates by 171%. InP substrate quarterly revenue reached a record $30.7 million, with adjusted gross margins surging from 8.2% a year ago to 45.0%. Management characterized the quarter as a business inflection point.

On the industry front, global InP substrate supply-demand gap exceeds 70%, with NVIDIA projecting demand to surge 20x over five years. Wedbush maintains its outperform rating, noting AI data center demand remains in early stages. Long-term supply agreements with Coherent and Lumentum, with backlog exceeding $100 million, provide further support.

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