Key Takeaways
- AXT shares jumped 10% after its Chinese subsidiary Tongmei agreed to raise up to $545 million for indium phosphide capacity.
- Tongmei is selling its own shares, so AXT issues no new stock and keeps about 73% of the subsidiary even at the full raise.
- Lumentum and Coherent, both AXT customers, are racing to make more indium phosphide lasers for AI data centers.
- The deal still needs Chinese government filings, and export permits remain the main risk into Thursday’s earnings.
AXT (AXTI) stock jumped 10% today after its Chinese subsidiary, Tongmei, signed deals to raise between RMB 1.91 billion and RMB 3.67 billion (about $285 million to $545 million).
The money will expand indium phosphide wafer capacity “at a time when demand for these wafers is outpacing supply,” AXT CEO Morris Young said. That’s good news for Lumentum (LITE) and Coherent (COHR), which both have long-term agreements to buy AXT’s wafers for their AI data-center lasers.
Tongmei pays its own way
Tongmei is issuing its own shares, so AXT sells no new stock, and even at the maximum raise it expects to keep about 73% of Tongmei and control of it.
That beats another AXT stock sale, since its operations burned cash in four of the five years from 2021 to 2025:
Even with an $11.1 million second-quarter profit, operations still used cash in the first half of 2026.
TIKR tracks 5 analysts on AXT. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on AXT, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See AXT’s Analyst Ratings
Built for a shortage
Analysts expect AXT’s revenue to more than double in 2026, then double again in 2027:
For the third quarter, AXT guided to about $66 million of revenue it can ship now, with upside if more export permits come through.
The shortage shows up downstream, too. Lumentum, up [6%] today, said in August that its EML laser-chip shortfall was little changed from the more than 30% of demand it gave in May. Its Nov. 5 report will show whether more substrate helps close that gap.
Coherent, up 1%, expected to double its own indium phosphide capacity by the end of September and more than double it again by the end of 2027, much of it on 6-inch wafers AXT is helping develop. Its Nov. 4 report will show if supply is keeping pace.
China holds the keys
The risks run through Beijing: the deal needs government filings, and AXT’s wafers need export permits.
My take: this is a smart way to fund capacity in a short market, and AXT shareholders keep most of the upside. Of course, export permits decide how much AXT can ship, and Thursday’s report is the next read.
So what is AXT stock actually worth?
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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!
