AXT, Inc. (AXTI): A Bull Case Theory 

We came across a bullish thesis on AXT, Inc. on Make Money, Make Time’s Substack by  Oliver | MMMT Wealth. In this article, we will summarize the bulls’ thesis on AXTI. AXT, Inc.’s share was trading at $18.54 as of January 30th. AXTI’s  forward P/E was 24.21 according to Yahoo Finance.

AXT, Inc. designs, develops, manufactures, and distributes compound and single element semiconductor substrates. AXTI has surged nearly 1,000% over the past six months, growing from a $300 million company to a $1.3 billion market cap, and the momentum shows no signs of slowing. Unlike other optics stocks, AXTI has consistently gained even on broader market down days, driven by the explosive demand for bandwidth from the AI boom.

Traditional copper cabling has become a bottleneck in high-performance data centers, creating a shift toward optical communications that rely on lasers. Producing these lasers requires Indium Phosphide (InP), a rare compound essential for high-performance, reliable photonic lasers. AXTI is one of the world’s leading manufacturers of InP substrate wafers, making it a critical supplier in the AI-driven data center build-out.

Financially, AXTI benefits from a unique pricing arbitrage. While Western competitors pay roughly $800/kg for 6N Indium, AXTI sources its raw materials from China at $415/kg and sells to Western hyperscalers, creating a significant margin advantage. The company is expected to deliver 32% revenue growth and 223% EBITDA growth in FY26, though net income margins remain negative at -18%. AXTI’s position in a duopoly with Sumitomo Electric Industries and its control over upstream supply chains reinforces its strategic importance.

However, the company faces geopolitical risk due to its U.S. headquarters and China-based manufacturing. Export license delays, tariffs, or other trade restrictions could disrupt cash flows and significantly impact revenue. Despite this, the market currently values AXTI at 11.6x NTM sales and 182x NTM EBITDA, reflecting a growth story driven more by strategic importance than traditional valuation metrics. For investors willing to navigate geopolitical uncertainties, AXTI represents a high-risk, high-reward opportunity with strong exposure to the AI-driven optics revolution.

Previously, we covered a bullish thesis on Lam Research Corporation (LRCX) by The Antifragile Investor in May 2025, which highlighted its essential role in semiconductor manufacturing, high-margin service flywheel, and strong moats. LRCX’s stock has appreciated by 181.99% since coverage as the thesis played out. Oliver | MMMT Wealth shares a similar view but focuses on AXTI’s optics supply chain, Indium Phosphide edge, and geopolitical-driven margin advantages.

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Disclosure: None.