AXT Jumped Nearly 10% and Has Doubled Since Earnings. Is It Too Late to Buy?

Key Stats for AXT Stock

• Current Price: $75.17
• Target Price (Mid): ~$424
• Street Target: ~$91
• Potential Total Return: ~464%
• Annualized IRR: ~44% / year

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What Happened?

Buying a stock after it has already doubled feels like showing up as the music gets louder. AXT (AXTI) has done exactly that since its July 30 earnings report, climbing from a $36.97 close the day before results to $75.17 by August 6 as investors piled into one of the purest small-cap plays on AI optical infrastructure. The company makes indium phosphide substrates, the specialty material inside the high-speed lasers and detectors that move data through AI data centers, and demand for that material is running well ahead of what AXT can produce.

The record quarter is already known. What a buyer needs to decide now is whether a stock near 47 times forward earnings still pays off, or whether the easy money left the moment the print hit the tape. The demand is real. The valuation is not forgiving.

What $75 Already Assumes

At $75.17, the market has stopped treating this as a struggling substrate maker. Shares carry a next-twelve-months P/E near 47 times and trade at roughly 13.5 times NTM revenue.

The forward setup does support fast growth. Management guided Q3 to about $66 million in revenue it can already ship on permits in hand or orders that need no permit, with non-GAAP net income of $0.30 to $0.32 per share. That implies sequential growth of nearly 40% off a quarter that was itself a record. Consensus models revenue climbing from about $88 million in 2025 to roughly $218 million in 2026 and about $461 million in 2027, a pace that would rank AXT among the fastest growers in the semiconductor supply chain. The price is not detached from reality, then. It is detached from a margin of safety, because 47 times forward earnings underwrites flawless execution on a ramp management itself calls a moving target.

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The Backlog Is Real, but Permits Still Hold the Keys

The reason to pay up is the visibility that AXT never used to have. CEO Morris Young told investors the company has “reached an inflection point in our business where the customer demand is extremely strong for our indium phosphide material.” CFO Gary Fischer put a number on it: about $66 million in Q3 revenue that either already has an export permit or does not require one. Backlog now sits well above $100 million and keeps growing even as shipments rise, and management said forward visibility has stretched to three or four quarters from the one or two it had before.

Customers are backing that with cash. AXT signed long-term supply agreements with Casela and Coherent carrying prepayments of $22.3 million and $25.4 million, and on July 29 it announced a capacity-reservation agreement with Lumentum that brings two deposits of $43.5 million each, applied as shipment credits, running through the end of 2031. Companies do not wire tens of millions in prepayments to a supplier they can easily replace.

The catch sits one layer down. Shipments leaving China for the rest of the world require export permits from the Ministry of Commerce, and management would not promise anything on timing. Business Development VP Tim Bettles said the team is “seeing more regularity in the process, especially in certain geographic regions,” but stopped short of calling the risk gone. Some of the newer agreements also ramp later rather than now: management noted the Casela deal does not start until 2027. So a chunk of the forward case leans on permit flow AXT does not control, an odd foundation under a 47 times multiple.

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A Multiple That Towers Over Its Peers

Against its own industry, AXT looks expensive on every line that matters. Shares trade near 13.5 times NTM revenue and 40 times NTM EBITDA, while the peer group of semiconductor and equipment names averages roughly 6.4 times revenue and 19 times EBITDA. KLA sits near 14 times forward revenue but converts it into steady profit and cash; Onto Innovation trades around 8 times; Skyworks and Qorvo sit below 3 times. AXT carries the richest earnings and EBITDA multiples in the set while generating negative free cash flow, because the capacity build is consuming cash even as the income statement inflects.

That premium is not automatically wrong. A company growing revenue past 100% and lifting gross margin from 8% to 45% in a year deserves to trade above a mature equipment maker. The question is whether it deserves more than double the peer average while its cash flow is still negative and its largest revenue stream depends on a government approval process.

TIKR Advanced Model Analysis

• Current Price: $75.17
• Target Price (Mid): ~$424
• Potential Total Return: ~464%
• Annualized IRR: ~44% / year

See analysts’ growth forecasts and price targets for AXT stock (It’s free!) >>>

That target rests on two revenue drivers: indium phosphide capacity tripling through 2026 toward a roughly $60 million quarterly run rate, then doubling again in 2027 toward $130 million a quarter, plus a mix shift to larger-diameter, higher-value substrates that lifts pricing. The margin driver is fixed-cost absorption, as volume fills the indium phosphide line and pushes gross margin toward the “5” handle management said it is targeting. The mid case assumes revenue compounding above 60% a year with net margin reaching the low 30s.

• Upside case: permits keep flowing, 6-inch substrates reach volume, and AXT becomes the dominant indium phosphide supplier as co-packaged optics scales demand further.
• Downside case: a single bad permit quarter, or any stumble in a ramp management calls a moving target, resets a stock that dropped 74% from its high to a July 29 low once already this year.
• Primary risk: export-permit timing and tighter U.S.-China restrictions, the one variable management cannot script.

Conclusion

The next permit-driven print settles this. AXT guided to about $66 million in secured Q3 revenue, so when it reports on October 29, the number to watch is whether actual revenue clears that floor with real upside from newly approved permits. Clearing $66 million comfortably says the guide was conservative, and the permit machine is working. Landing at or below it, with soft commentary on Ministry of Commerce approvals, says the near-term ceiling is lower than a 47 times multiple assumes. For a stock priced for perfection and capable of moving 20% in a session, that one line will matter more than any backlog headline.

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Should You Invest in AXT?

The only way to really know is to look at the numbers yourself. TIKR gives you free access to the same institutional-quality financial data that professional analysts use to answer exactly that question.

Pull up AXT, and you’ll see years of historical financials, what Wall Street analysts expect for revenue and earnings in the quarters ahead, how valuation multiples have moved over time, and whether price targets are trending up or down.

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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 stocks mentioned. Thank you for reading, and happy investing!