AXTI Stock Skyrockets As Investors Cheer Blowout Guidance, Record Quarterly Revenue — Needham Spots A 'Real' AI Networking Opportunity

• Beyond the near-term earnings beat, Needham said AXT is becoming better positioned to capitalize on AI-driven demand for optical networking components.
• The firm said that deals with two global InP laser providers and growth in China's optical networking market create "real opportunities" for AXT to gain data center networking share.
• AXT forecast earnings per share of $0.3 to $0.32 in the third quarter on revenue of $66 million, blowing past Wall Street’s estimates of an EPS of $0.1 on revenue of $38.8 million.

Shares of AXT Inc. (AXTI) continued soaring on Friday, surging by nearly 47% in the opening trade following a 27% surge on Thursday, as investors cheered the semiconductor materials company’s blowout third-quarter guidance.

AXT’s better-than-expected second-quarter (Q2) performance and the third-quarter (Q3) guidance also earned it an upgrade and a price target hike from Wall Street, according to TheFly.

AXT shares were up more than 20% in Friday’s opening trade after paring some of the early gains. AXTI was among the top trending tickers on Stocktwits at the time of writing.

Needham Says AXTI's AI Networking Growth Is Becoming 'Real'

Needham upgraded AXT to ‘Buy’ from ‘Hold’ with a $90 price target, implying an upside of 61% from current levels.

Beyond the near-term earnings beat, the firm said AXT is becoming better positioned to capitalize on AI-driven demand for optical networking components.

Needham pointed to the company's contracts with two global indium phosphide (InP) laser providers and the continued growth of China's domestic optical networking ecosystem as "real opportunities" for AXT to expand its market share in data center networking.

Analysts at B. Riley raised their price target on AXT to $55 from $52 while maintaining a ‘Neutral’ rating, updating its estimates following the company's Q2 earnings report.

AXT reported earnings per share (EPS) of $0.19 on revenue of $47.6 million, beating an estimated EPS of $0.07 on revenue of $34.1 million, according to Fiscal.ai data. AXT highlighted that its Q2 revenue was the highest quarterly revenue in its history.

The company forecast an EPS of $0.3 to $0.32 in Q3 on revenue of $66 million, blowing past Wall Street’s estimates of an EPS of $0.1 on revenue of $38.8 million.

AXTI Has Reached An ‘Inflection Point,’ Says CEO

During a post-earnings call with analysts, AXT CEO Morris Young said that the company has reached an “inflection point” as demand for its indium phosphide (InP) materials accelerates, driven by the rapid build-out of AI data center infrastructure.

Young said the company is on track to more than triple its indium phosphide revenue opportunity by the end of 2026, fueled by faster-than-expected capacity expansion, manufacturing productivity improvements and a shift toward larger-diameter, higher-value substrates.

AXT is also planning to double its InP production capacity in 2027 after expanding capacity this year, a move that would make it the world's largest indium phosphide producer.

“Customer demand continues to outpace supply, no matter how fast we add capacity. Broadly, the deployment of optical connectivity in AI data center is accelerating as hyperscalers scale GPU dense architectures and look for higher speed, lower power photonics to move data more efficiently,” Young said, while adding that the order backlog now exceeds $100 million.

He said hyperscalers are rapidly deploying optical connectivity for AI data centers, driving demand for indium phosphide-based lasers and detectors used in 800G and 1.6T optical transceivers. Young also highlighted AXT's recently announced long-term supply agreements with Coherent Corp. (COHR), Lumentum Holdings Inc. (LITE) and Casela.

How Retail Traders Reacted To AXT Stock

Retail sentiment on Stocktwits around AXTI was in the ‘extremely bullish’ territory, with message volumes at ‘extremely high’ levels at the time of writing.

One bullish user believes that AXT shares will top $150 by the end of 2026, noting that they are slowly adding to their position in the company.

AXTI stock is up 242% year-to-date and 2,587% over the past 12 months. The Vanguard Morningstar Total Stock Market ETF (VTI) is up 17% over the past 12 months, while the Tema Photonics & Optical ETF (LAZR) is down 27%.

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