AXT, Inc. (AXTI) Stock Forecast & Price Target

AXT is attractive fundamentally because its Indium Phosphide business is scaling rapidly, with Q1 InP revenue of $13.6M rising 70% Q/Q and 258% Y/Y, while InP now represents just over 50% of sales and helped lift gross margin to 29.9% from 21.5% in Q4. The company’s backlog has reached a record high of over $100M, Q2 revenue guidance is about $34M with a “high degree of confidence,” and management expects Q2 to be the largest InP quarter in AXT’s history, indicating strong near-term demand visibility. Continued capacity expansion, including a plan to double InP capacity from 4Q25 levels by year-end 2026, combined with export-license-driven upside and improving pricing, supports the view that earnings and margins can outpace reported revenue growth.

AXT is facing a difficult fundamental backdrop because its Ge revenues were only $0.2M in Q1, roughly flat sequentially and sharply lower year over year, while the segment remains pressured by aggressive raw Ge pricing and weak material economics. Although demand for transceivers and optical modules may expand 5x-7x and InP supply could become tighter, AXT still carries execution and financing risk, including the possibility that the Tongmei IPO on the STAR Market in China could be delayed or fail, which would hurt capital flexibility. Inventory rose to $90.2M from $81.7M in Q4 as production ramps, cash and investments slipped to $123M from $128.4M, and customer design wins remain uncertain if buyers shift to alternative suppliers or technologies.