Shares shifted as AXT Inc. rocketed to $133.59, a 10.4% single-day gain, after bullish commentary at the B. Riley Securities Institutional Investor Conference cast the compound semiconductor maker as a overlooked beneficiary of the AI infrastructure buildout. The move caps a stunning stretch: the stock is up roughly 26% from its May 20 close of $104.61 in just two trading sessions, raising a critical question about whether narrative is outrunning fundamentals. AXT Rockets on AI Supply-Chain Hype, but Does a $7 Billion Valuation Make Sense for a Company Losing Money on $107 Million in Sales?
Shares surged as AXT Inc. hit $133.59, up 10.4% in a single session, after the B. Riley conference spotlighted the compound semiconductor maker as a hidden pick-and-shovel play in the AI data center buildout. The stock has now climbed roughly 611% year-to-date — but the gap between the narrative and the numbers demands scrutiny.
• The Product Is Real, but the Revenue Is Tiny Relative to the Hype. AXT makes specialty wafer substrates — thin discs of materials like indium phosphide that are used when ordinary silicon can't meet a chip's performance requirements.
Indium phosphide is a key ingredient in the high-speed optical data links that AI-focused data centers need.
In Q1 2026, indium phosphide alone generated $13.6 million in revenue, primarily from data center applications — but total quarterly revenue was just $26.9 million, up 39% year-over-year. At today's price the stock commands a market cap approaching $7.8 billion on roughly $107 million in annualized sales — a price-to-sales ratio north of 70x.
• The Company Is Still Losing Money While Spending Aggressively to Expand. AXT posted a net loss of $1.6 million (–$0.03/share) in Q1 2026, an improvement from –$0.20/share a year ago , but profitability remains elusive. The company recently raised $632.5 million to expand indium phosphide capacity , and management plans to double capacity to $35 million per quarter by year-end 2026 and reach $65–70 million per quarter by late 2027 or early 2028. Those targets are ambitious but unproven.
• China Export Controls Remain an Existential Wild Card. China added indium phosphide to its export control list in February 2025, requiring AXT to secure government permits for every overseas shipment — creating unpredictable shipping interruptions.
AXT's subsidiary holds export permits for Europe, Japan, the UK, and Canada, but not yet for the United States — its highest-value market. U.S. tariffs on Chinese-made wafers have also escalated to 70%. Any permit freeze could cripple revenue overnight.
• The Rally Runs on Story, Not Earnings. The year-to-date move has been driven by backlog data, capacity expansion announcements, and growing recognition that indium phosphide sits at a structural chokepoint in AI infrastructure. But conference commentary is not a contract. With no U.S. export permits in hand and losses continuing, investors are pricing in a future that Beijing's trade bureaucrats could delay — or deny — at any moment.