On August 14, AXT Inc rose 6.86% in regular trading, trading at $83.22/share, with turnover of $134 million. The stock extended its post-earnings rally as the market continued to digest the strong Q2 results and indium phosphide supply-demand dynamics.

The core catalyst remains the company's Q2 earnings report, which significantly exceeded expectations. Adjusted EPS came in at $0.19, beating the consensus estimate of $0.07 by over 170%. Revenue surged 165% year-over-year to $47.6 million versus the $34.1 million estimate. Indium phosphide substrate quarterly revenue reached a record $30.7 million, with adjusted gross margin leaping from 8.2% a year ago to 45.0%. Management characterized the quarter as a business inflection point.

On the industry level, the global indium phosphide substrate supply-demand gap exceeds 70%, with NVIDIA forecasting a 20x demand surge over the next five years driven by AI data center applications. AXT has secured long-term supply agreements with Coherent and Lumentum, with backlog surpassing $100 million. Wedbush maintains an outperform rating, noting AI data center demand remains in its early stages.

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