AXT (NASDAQ:AXTI) Releases Quarterly Earnings Results, Beats Estimates By $0.10 EPS

AXT (NASDAQ:AXTI) announced its quarterly earnings results on Thursday. The semiconductor company reported $0.41 EPS for the quarter, beating the consensus estimate of $0.31 by $0.10, FiscalAI reports. AXT had a return on equity of 0.96% and a net margin of 3.23%. The business had revenue of $73.41 million for the quarter, compared to analyst estimates of $66.00 million.

Here are the key takeaways from AXT’s conference call:

• Q3 revenue surged 162% year over year to $73.4 million, while non-GAAP net income rose to $26.8 million, or $0.41 per diluted share, from $11.9 million in Q2. Gross margin expanded to 56.1%, driven by higher volume, favorable product mix, pricing, and larger wafer sizes.
• Demand for indium phosphide substrates continues to outpace supply, with backlog exceeding $500 million and all customers reportedly on allocation. Management said capacity additions are progressing faster than planned, expects Q4 non-GAAP EPS of $0.57-$0.59, and believes gross margin could exceed 60% next quarter.
• A $43.5 million wafer prepayment from Lumentum under a long-term supply agreement boosted cash and supports expanded indium phosphide production. AXT also expects 4-inch laser substrates and 6-inch pilot production to provide additional revenue and productivity gains in 2027.
• Tongmei agreed to raise up to $545 million in private equity financing to fund indium phosphide and raw-material capacity expansion, while AXT expects to retain approximately 73.4% ownership. The transaction advances Tongmei’s planned Hong Kong listing but will reduce AXT’s ownership by roughly 12.1%.
• Management highlighted continuing risks from export permits, tariffs and trade restrictions, as well as potential raw-material cost increases and seasonal weakness in portions of the gallium arsenide business. Executives remain confident about 2027-28 demand but acknowledged that supply-demand conditions several years out are less certain.

AXT Price Performance

AXTI stock opened at $60.88 on Friday. The company has a 50 day moving average price of $66.62 and a 200 day moving average price of $63.91. AXT has a fifty-two week low of $6.83 and a fifty-two week high of $143.16. The stock has a market capitalization of $3.99 billion, a PE ratio of 3,044.00 and a beta of 1.86.

AXT News Summary

Here are the key news stories impacting AXT this week:

• Positive Sentiment: Third-quarter results substantially exceeded expectations. AXT reported adjusted EPS of $0.41, versus the $0.31 consensus estimate, while revenue reached approximately $73.4 million, above expectations of $66.0 million. EPS improved from a loss of $0.03 in the year-ago quarter. AXT Beats Q3 Earnings and Revenue Estimates
• Positive Sentiment: Growth and profitability accelerated. Revenue increased 54% sequentially and 162% year over year to a record $73.4 million, driven by demand for indium phosphide materials. GAAP gross margin expanded to 56.0% from 44.9% in the prior quarter, while GAAP net income rose to $25.7 million from $11.1 million. AXT Q3 Revenue Reaches Record $73.4 Million
• Positive Sentiment: Tongmei financing could support expansion. AXT announced agreements for up to RMB 3.67 billion, or approximately $545 million, in private-equity financing for its Tongmei subsidiary. The funds may strengthen the subsidiary’s capital base and support growth, although the eventual structure and dilution implications remain important for investors. AXT Announces Financing for Tongmei
• Neutral Sentiment: The stock’s technical and valuation profile remains volatile. AXTI recently moved above its 200-day moving average, but it trades well below its 50-day average and carries a very high reported P/E ratio. These factors can amplify reactions to earnings and profit-taking.
• Negative Sentiment: Profit-taking and risk reduction are weighing on sentiment. The stock had risen sharply in recent weeks, encouraging investors to lock in gains ahead of earnings. Export permits, China-related approvals and broader semiconductor volatility add further uncertainty. AXT Falls as Investors Take Profits
• Negative Sentiment: Reported insider activity is a cautionary signal. The supplied data shows 16 open-market insider sales and no purchases over the past six months, including significant sales by executives.

Insider Buying and Selling

In other AXT news, Director Leonard Leblanc sold 4,000 shares of the stock in a transaction on Monday, August 17th. The stock was sold at an average price of $96.07, for a total value of $384,280.00. Following the transaction, the director directly owned 113,129 shares in the company, valued at approximately $10,868,303.03. This trade represents a 3.42% decrease in their position. The sale was disclosed in a filing with the Securities & Exchange Commission, which is accessible through this hyperlink. Insiders own 5.97% of the company’s stock.

Analyst Upgrades and Downgrades

Several equities research analysts have recently weighed in on AXTI shares. Zacks Research lowered shares of AXT from a “strong-buy” rating to a “hold” rating in a report on Tuesday, September 29th. Weiss Ratings raised shares of AXT from a “sell (d-)” rating to a “sell (d+)” rating in a report on Friday, August 14th. UBS Group set a $90.00 price target on shares of AXT in a report on Friday, July 31st. Needham & Company LLC upgraded shares of AXT from a “hold” rating to a “buy” rating and set a $90.00 price target on the stock in a research report on Friday, July 31st. Finally, B. Riley Financial decreased their price objective on shares of AXT from $73.00 to $52.00 and set a “neutral” rating on the stock in a research note on Tuesday, July 28th. Three investment analysts have rated the stock with a Buy rating, two have given a Hold rating and one has assigned a Sell rating to the stock. According to data from MarketBeat, AXT currently has an average rating of “Hold” and a consensus target price of $77.00.

About AXT

AXT, Inc develops and manufactures compound semiconductor substrates used as the foundation for various high-performance electronic and optoelectronic devices. Its principal products include gallium arsenide (GaAs), indium phosphide (InP), and germanium substrates, along with other specialty materials such as gallium antimonide and indium arsenide.

The company’s substrates are used in applications including wireless communications, fiber-optic and data-center networks, lasers, light-emitting diodes, solar cells, consumer electronics, and aerospace and defense systems.