Key Takeaways
- AXT shares fell 14% in the past week as AI and optical stocks sold off, including on the day Marvell agreed to buy Lumentum.
- Third-quarter revenue hit a record $73.4 million, up 162% from a year earlier, and fourth-quarter guidance points higher.
- With demand outrunning supply and two analysts sticking with Buy ratings, the selloff looks like a chance to buy.
AXT (AXTI) shares fell 14% in the past week, right after the best quarter in the company’s history. Most of the selling came with the rest of AI optics, including on Monday, when Marvell (MRVL) agreed to buy Lumentum (LITE) for $115 billion in stock.
The best quarter in AXT’s history
Third-quarter revenue reached a record $73.4 million, up 162% from a year earlier and not far off the $88.3 million AXT brought in for all of 2025. GAAP gross margin rose to 56.0% from 22.3%, and non-GAAP EPS swung to a $0.41 profit.
CEO Morris Young said AXT entered 2026 aiming to double its indium phosphide capacity, and “not only have we surpassed that goal but we have more than quadrupled our 2026 indium phosphide revenue opportunity.”
AXT guided fourth-quarter non-GAAP EPS to $0.57-$0.59. Analysts expect normalized EPS to go from a loss in 2025 to $1.18 this year and $2.65 in 2027:
Four quarters at the guided pace would already cover most of that 2027 figure.
$545 million to build more capacity
The day before, AXT said its Chinese subsidiary Tongmei agreed to raise up to $545 million to add indium phosphide capacity, since demand is “outpacing supply,” as Young put it. AXT would keep about 73.4% of Tongmei and control of it, and the lead investor will help Tongmei list overseas.
TIKR tracks 5 analysts on AXT. How many say “Buy”?
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Caught in the optics selloff
AXT fell the morning after its report, as AI stocks sold off on Amazon’s results and Intel’s weak outlook. It fell again Monday alongside Lumentum and Marvell, with no news of its own.
Lumentum makes indium phosphide lasers in its own fabs, and Marvell would fold them into a much bigger chip company. Lumentum fell 16% over the past week, and Marvell 27%. For AXT, the question is whether a combined buyer orders more substrates as it scales, or bargains harder on price.
Wall Street isn’t backing off
Wedbush reiterated its Buy rating and $93 target on Oct. 30, and Needham kept its Buy with a $90 target. The five analysts covering AXT have a consensus target of $92, nearly double Monday’s close.
At that close, AXT traded at about 21x forward earnings, a reasonable price for earnings that analysts expect to more than double next year. Its wafers are made in China and need export permits to ship, so trade policy is the main risk.
I’d treat this week’s drop as a chance to buy. The next checkpoints are Tongmei’s December close and AXT’s fourth-quarter report early next year.
So what is AXT stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
