AXT Inc. (NASDAQ:AXTI) shares are surging premarket on Friday after the company posted strong second-quarter results after Thursday’s closing bell.
Semiconductor wafer manufacturer AXT reported adjusted EPS of 19 cents, which beat the analyst consensus estimate of seven cents, according to Benzinga Pro data.
Revenue rose 164.80% year over year (Y/Y) to $47.59 million, blowing past the Street estimate of $34.09 million.
Adjusted gross margin expanded to 45.0% in the second quarter from 8.2% in the second quarter of 2025, led by higher volumes and favorable product mix.
Adjusted operating profit stood at $11.2 million, better than the loss of $6.1 million in the prior-year quarter.
Cash, cash equivalents, and investments stood at $748.8 million as of June 30, 2026.
Record Indium Phosphide Revenue
Indium phosphide (InP) revenue hit a record $30.7 million, driven by strong demand from AI data center applications.
Morris Young, CEO of AXT, said the company has reached a key inflection point, with strong demand for data center optical connectivity, expanding manufacturing capacity, and improved productivity driving a significant increase in revenue. He highlighted that the second quarter marked AXT’s highest quarterly indium phosphide revenue to date.
Revenue by product category included $6.6 million from gallium arsenide, $272,000 from germanium substrates, and record consolidated raw material joint venture revenue of $10 million. The company’s top five customers accounted for approximately 30% of revenue, with no single customer contributing more than 10%.
InP backlog exceeded $100 million, with demand continuing to outpace supply. Growth is being fueled by AI data center expansion, including adoption of 800G and 1.6 terabit optical transceiver modules, as well as future near-packaged optics and co-packaged optics technologies.
In China, revenue from InP-based laser markets more than doubled sequentially in the second quarter, with further growth expected in the third quarter of 2026.
Outlook & Management Commentary
The company projects third quarter adjusted EPS of 30-32 cents per share (vs consensus of 11 cents) and sales of $66.000 million vs street view of $38.801 million.
It anticipates GAAP EPS of 29 to 31 cents versus the 9 cents estimate.
AXT is on track to double InP production capacity in 2026, driven by faster capacity expansion, improved manufacturing productivity from new crystal growth furnace designs, and customer migration toward larger-diameter substrates and higher-value products.
The company expects to more than triple its InP revenue opportunity by the end of 2026, with further expansion anticipated in 2027. AXT expects AI infrastructure growth to support a multi-year demand cycle for InP materials.
AXTI Price Action: AXT shares were up 36.34% at $64.00 during premarket trading on Friday, according to Benzinga Pro data.
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