AXT, Inc. shares reached an all-time high on Friday, closing at $140.83 after a 16.37% rally. This followed a 15.69% gain on Thursday, marking a volatile week for the stock. The surge was driven by investor enthusiasm for indium phosphide (InP), a material used in high-speed optical connections for AI data centers. U.S. markets are closed Monday for Memorial Day, with trading resuming Tuesday.
AXT ended the week up 13.8% from $123.78 the previous Friday. The week saw choppy trading: shares fell 14.46% on Monday, rebounded Tuesday, edged lower Wednesday, then surged Thursday and Friday. The stock's gains reflect growing demand for InP substrates, which are critical for optical data transfer in AI infrastructure.
The company is scheduled to participate in the Craig-Hallum Institutional Investor Conference in Minneapolis on May 28, followed by the Northland Securities Virtual Growth Conference on June 23. AXT also recently attended the B. Riley investor event in Los Angeles on May 21. Additionally, the company's annual shareholder meeting, which was adjourned due to lack of quorum, will reconvene on June 4 at 11 a.m. Pacific. Proxies for roughly 48% of eligible shares were received before the break.
AXT reported first-quarter revenue of $26.9 million, up from $19.4 million a year ago. The GAAP net loss narrowed to $1.6 million, or 3 cents per share, from a loss of $8.8 million, or 20 cents per share, in the prior year. Gross margin improved sharply to 29.6%, compared to a negative 6.4% last year. CEO Morris Young described the period as "an incredibly exciting time" for AXT, highlighting the company's $632.5 million capital raise to fund InP capacity expansion at its Tongmei unit and research into 6-inch InP products.
The capital raise involved selling 8.56 million shares at $64.25 last month, generating about $550 million, with underwriters later exercising their over-allotment. Most proceeds are earmarked for Beijing Tongmei Xtal Technology, AXT's China-based subsidiary. However, the stock's rapid appreciation has raised concerns about valuation. The average one-year analyst price target stands at $89.50, well below Friday's close, according to Fintel.
Competitive dynamics are also in play. Larger rivals Coherent and Lumentum, which are also tied to AI data-center optics, saw their shares decline on Friday. Meanwhile, the iShares Semiconductor ETF (SOXX) rose 2.4%. Supply chain risks remain a key factor. China's export controls on indium and photonics supplies persist despite recent U.S.-China talks, as reported by Reuters. Paul Triolo, partner at DGA-Albright Stonebridge Group, noted that slow or politically driven licensing could disrupt companies reliant on the supply chain.
AXT has flagged several risks in its filings, including export permits for InP substrates, Tongmei's progress toward a STAR Market listing in China, and ongoing U.S.-China tensions. The company warns that delays in permits or capacity, or a slowdown in AI optical demand, could pose challenges given the stock's recent rally.
