AXT Inc. (NASDAQ:AXTI) Surpasses Revenue Estimates as Data Center Demand Fuels Growth
Earnings Overview
AXT Inc., a manufacturer of compound semiconductor wafer substrates, reported financial results for the third quarter of 2025 that demonstrated a significant top-line beat against analyst expectations. The company's performance was largely driven by a substantial surge in demand for its indium phosphide (InP) products from data center applications. While the company remains unprofitable, the rate of loss narrowed considerably both year-over-year and sequentially, contributing to a positive market reaction in after-hours trading.
The key financial results for the quarter are summarized below:
- Revenue: $28.0 million, compared to analyst estimates of $20.2 million.
- Non-GAAP EPS: A loss of $0.03 per share, compared to an estimated loss of $0.13 per share.
- GAAP Gross Margin: 22.3%, a significant improvement from 8.0% in the previous quarter.
Market Reaction and Performance
The market responded favorably to the earnings beat and improved operational metrics. Following the announcement, AXT Inc.'s stock experienced an after-market price increase of approximately 6.56%. This positive movement suggests investor confidence in the company's ongoing turnaround efforts and its positioning within high-growth end markets. The stock has also shown strength over recent weeks, with gains of over 43% in the past month.
Operational Highlights and Management Commentary
The press release highlighted a remarkable sequential growth in the company's indium phosphide revenue, which increased by more than 250% and reached a three-year high. Chief Executive Officer Morris Young attributed this strength to a "strong uptick in indium phosphide demand from data center applications globally" and the company's success in obtaining necessary export permits for significant orders.
Management expressed optimism for the future, citing a healthy backlog for both indium phosphide and gallium arsenide materials. The company's strategic focus remains on gross margin recovery, operating expense discipline, and inventory reduction. CEO Morris Young stated, "With strong, ongoing market trends fueling the data center upgrade cycle, we believe we have tremendous opportunity in 2026 to drive meaningful growth in our business and a return to profitability."
Balance Sheet and Forward Look
While the company did not provide a formal quantitative outlook in its release, the commentary points to positive momentum heading into 2026. The balance sheet shows a solid cash position, though investors will note an increase in short-term loans compared to the end of 2024. The company also provided an update on the potential STAR Market listing of its subsidiary, Tongmei, noting that the process remains subject to regulatory approvals in China.
Comparison with Analyst Forecasts
The company's results handily exceeded expectations for the reported quarter. Looking ahead, analysts have set the following estimates against which future performance will be measured:
- Q4 2025 Revenue Estimate: $22.4 million
- Q4 2025 EPS Estimate: A loss of $0.10 per share
- Full Year 2025 EPS Estimate: A loss of $0.57 per share
- Full Year 2025 Revenue Estimate: $80.7 million
For a more detailed breakdown of historical earnings and future analyst estimates, you can review the data here.
Disclaimer: This article is for informational purposes only and is not intended as investment advice. All investment decisions carry risk, and individuals should conduct their own research or consult with a qualified financial advisor before making any investment decisions.
