AXT (NASDAQ:AXTI) and Rambus (NASDAQ:RMBS) Head to Head Comparison

AXT (NASDAQ:AXTI) and Rambus (NASDAQ:RMBS) are both computer and technology companies, but which is the better investment? We will contrast the two companies based on the strength of their analyst recommendations, institutional ownership, earnings, profitability, valuation, dividends and risk.

Risk and Volatility

AXT has a beta of 2.28, suggesting that its share price is 128% more volatile than the S&P 500. Comparatively, Rambus has a beta of 1.2, suggesting that its share price is 20% more volatile than the S&P 500.

Insider and Institutional Ownership

49.5% of AXT shares are held by institutional investors. Comparatively, 88.5% of Rambus shares are held by institutional investors. 8.4% of AXT shares are held by insiders. Comparatively, 1.0% of Rambus shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Earnings & Valuation

This table compares AXT and Rambus’ gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
AXT	$75.79 million	1.39	-$17.88 million	($0.40)	-5.92
Rambus	$461.12 million	9.65	$333.90 million	$3.27	12.64

Rambus has higher revenue and earnings than AXT. AXT is trading at a lower price-to-earnings ratio than Rambus, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares AXT and Rambus’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
AXT	-14.75%	-5.85%	-3.73%
Rambus	48.31%	16.74%	13.70%

Analyst Recommendations

This is a summary of current ratings and target prices for AXT and Rambus, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
AXT	0	0	4	0	3.00
Rambus	0	0	4	0	3.00

AXT currently has a consensus target price of $5.38, suggesting a potential upside of 126.79%. Rambus has a consensus target price of $77.75, suggesting a potential upside of 88.17%. Given AXT’s higher possible upside, research analysts clearly believe AXT is more favorable than Rambus.

Summary

Rambus beats AXT on 9 of the 12 factors compared between the two stocks.

About AXT

AXT, Inc. designs, develops, manufactures, and distributes compound and single element semiconductor substrates. The company offers indium phosphide for use in data center connectivity using light/lasers, high-speed data transfer in data centers, 5G communications, fiber optic lasers and detectors, consumer devices, passive optical networks, silicon photonics, photonic integrated circuits, thermo-photovoltaics, RF amplifier and switching, infrared light-emitting diode (LEDS) motion control, lidar for robotics and autonomous vehicles, and infrared thermal imaging. It also provides semi-insulating gallium arsenide (GaAs) substrates for use in Wi-Fi and IoT devices, transistors, direct broadcast television, power amplifiers, satellite communications, and solar cells; and semi-conducting GaAs substrates that are used in LEDs, screen displays using micro-LEDs, printer head lasers and LEDs, 3-D sensing using VCSELs, data center communication using VCSELs, sensors for industrial robotics/near-infrared sensors, optical couplers, solar cells, night vision goggles, lidar for robotics and autonomous vehicles, and other lasers, as well as laser machining, cutting, and drilling. In addition, the company offers germanium substrates for use in multi-junction solar cells for satellites, optical sensors and detectors, terrestrial concentrated photo voltaic cells, infrared detectors, and carrier wafer for LED. Further, it provides 6N+ and 7N+ purified gallium, boron trioxide, gallium-magnesium alloy, pyrolytic boron nitride (pBN) crucibles, and pBN insulating parts. It sells its products through direct salesforce in the United States, China, and Europe, as well as through independent sales representatives and distributors in Japan, Taiwan, Korea, and internationally. The company was formerly known as American Xtal Technology, Inc. and changed its name to AXT, Inc. in July 2000. AXT, Inc. was incorporated in 1986 and is headquartered in Fremont, California.

About Rambus

Rambus Inc. provides semiconductor products in the United States, South Korea, Singapore, and internationally. The company offers DDR memory interface chips, including DDR5 and DDR4 memory interface chips to module manufacturers, OEMs, and hyperscalers; silicon IP, such as interface and security IP solutions that move and protect data in advanced data center, government, and automotive applications; and interface IP solutions for high-speed memory and chip-to-chip digital controller IP. It also provides a portfolios of security IP solutions, including crypto cores, hardware roots of trust, high-speed protocol engines, and chip provisioning technologies; and portfolio of patents that covers memory architecture, high-speed serial links, and security products. It markets its products and services through its direct sales force and distributors. Rambus Inc. was incorporated in 1990 and is headquartered in San Jose, California.