AXT rides AI boom with 38.6% revenue surge—but can it last?
AXT Inc. has seen a sharp rise in demand as tech giants pour billions into AI infrastructure. The company’s first-quarter revenue jumped 38.6% year-over-year, reaching $26.9 million. Analysts are now watching whether this growth will last or fade as AI spending evolves. The surge in AI investment has driven demand for AXT’s specialised substrates. These materials—gallium arsenide, indium phosphide, and germanium—enable fast optical connections between GPU racks in data centres. Without them, high-speed AI processing would struggle to keep up.
Major tech firms are ramping up spending to support AI expansion. Meta Platforms plans capital expenditures of up to $135 billion by 2026. Microsoft’s budget for this fiscal year alone hits $190 billion, while Alphabet has raised its capex to $185 billion. Amazon leads the pack with a projected $200 billion in spending. Combined, these four companies may invest up to $725 billion this year, much of it directed at AI infrastructure.
AXT’s recent financials reflect this boom. First-quarter revenue climbed to $26.9 million, with a record backlog of $100 million. Gross margins also improved to 29.6%, well above the 12.7% GAAP gross margin projected for 2025. Despite this, the company’s market cap stands at $7.52 billion, and analysts remain cautious.
Wall Street currently holds a consensus 'Moderate Buy' rating on AXT. The average price target sits near $87.75 per share, implying a potential 29% downside from its present level. The key question is whether AXT can turn AI-driven orders into steady, long-term earnings rather than short-lived spikes. AXT’s future hinges on sustaining growth as AI spending accelerates. The company’s substrates play a critical role in data centre performance, but analysts are waiting to see if demand remains strong. With tech giants committing hundreds of billions to AI, the coming quarters will reveal whether AXT can capitalise on this trend.
