AXT (AXTI) Q2 results "handily" exceeded its prior outlook and consensus estimates thanks to strong demand for indium phosphide substrates, Wedbush said in a report Friday.

The note pointed to non-GAAP EPS performance that nearly tripled its guidance. Revenue and gross margin were also ahead.

"Growth was driven primarily by data center applications, and management characterized the quarter as an inflection point in the business rather than a one-quarter step-up," the note said.

The note said its leadership in intellectual property, manufacturing capacity and technical capability has positioned the company to capitalize on the AI-fueled opportunity.

"And with this opportunity seemingly still in the early innings, we see no reason to bet against AXTI," the note said. Wedbush kept its outperform rating with a price target of $93.

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