AXT Inc. (NASDAQ: AXTI) reported first‑quarter 2026 results that surpassed consensus expectations, posting revenue of $26.9 million and a GAAP net loss of $1.6 million, or $0.03 per share, compared with analyst estimates of a $0.07 loss per share.
Revenue growth was driven by a 39.1% year‑over‑year increase in indium phosphide (InP) substrate sales, which accounted for $13.6 million of the total. Gallium arsenide and germanium substrate revenues were $5.4 million and $0.2 million, respectively, while a raw‑material joint‑venture segment contributed $7.6 million. The stronger mix and higher average selling prices for high‑end low‑etch‑pit‑density wafers helped lift overall revenue above the $26.4 million consensus estimate.
Gross‑margin expansion was a key factor behind the earnings beat. GAAP gross margin rose to 29.6% from –6.4% in Q1 2025, while non‑GAAP gross margin improved to 29.9% from –6.1%. The improvement reflects higher production volumes and a richer mix of InP products, which command higher pricing power in the AI data‑center market.
Comparing to prior periods, Q1 2025 revenue was $19.4 million with a GAAP net loss of $8.8 million ($0.20 per share), and Q4 2025 revenue was $23.0 million with a GAAP net loss of $3.5 million ($0.08 per share). The current quarter’s results therefore represent a clear acceleration in both top‑line growth and profitability.
CEO Morris Young said, "We are a foundational supplier for the multi‑year AI growth cycle, broadening our customer base to Tier‑1 companies and doubling InP manufacturing capacity this year. Our subsidiary, JinMei, is refining high‑purity indium to secure a guaranteed supply." CFO Gary Fischer added, "Revenue for the first quarter of 2026 was $26.9 million, with Indium Phosphide accounting for $13.6 million. Non‑GAAP gross margin was 29.9%, driven by volume and mix. We completed a $632.5 million capital raise to fund InP capacity expansion and R&D for 6‑inch wafers."
The company guided for at least $34 million in revenue in Q2 2026 and expects GAAP net income of $0.05 to $0.07 and non‑GAAP net income of $0.06 to $0.08, signaling a transition to profitability in the second quarter.
AXT’s strategic focus includes doubling InP capacity by the end of 2026 and again by the end of 2027, expanding into 6‑inch wafer production, and pursuing a subsidiary IPO in China. The company’s capital raise of $632.5 million supports these initiatives and positions it to meet the growing demand for InP substrates in AI data‑center and high‑speed optical interconnect markets.
While export permit uncertainty remains a headwind, the company’s ongoing capacity expansion and vertical integration through JinMei mitigate supply risks. Potential dilution from future equity offerings is a noted risk, but the company’s strong backlog—exceeding $100 million—provides visibility into future revenue streams.
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