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

AXT is viewed positively because its revenue growth is being led by Indium Phosphide, with Q1 InP sales of $13.6M up 70% Q/Q and 258% Y/Y, while total revenue rose 17% Q/Q to $26.9M and gross margin expanded to 29.9% from 21.5% in Q4. The company’s record InP backlog of over $100M, expected largest-ever InP quarter in Q2, and guidance for about $34M in revenue with a return to profitability suggest demand is outpacing current supply and that export-license approvals could unlock further upside. Supportive fundamentals also include capacity expansion that is running ahead of plan, a target to double InP capacity from 4Q25 levels by year-end 2026, and strong exposure to rapidly growing data center, AI, and optical interconnect markets, especially in China and Asia Pacific, which generated 78% of Q1 revenue.

AXT is facing a negative fundamental setup because near-term demand and pricing trends are uneven: Ge revenue was only $0.2M in Q1, roughly flat sequentially and down sharply year over year, while raw material sales still made up about 28% of total revenues versus a 5-year average of 25%, underscoring reliance on a lower-quality mix. At the same time, inventory rose to $90.2M from $81.7M as production ramps, cash and investments slipped to $123M, and opex increased to $8.6M non-GAAP and $9.6M GAAP, suggesting scaling costs are outrunning operating leverage. Although 2026E estimates imply revenue of $135.8M and 33.1% gross margin, execution risk remains high from the proposed Tongmei IPO, possible customer delays or substitution away from AXTI materials, and potential bottlenecks in InP supply.