AXT (NASDAQ: AXTI) closed Friday at $60.35, up about 29% — and here's the wild part: that was the stock's second ~27% up-day in a row. Thursday it jumped on a big customer supply deal; Friday it ripped again on earnings. Two sessions, roughly a 60% run.

What actually lit the fuse: Q2 revenue landed at $47.6M, up 165% year-on-year (and 77% from Q1), crushing the ~$34M analysts had pencilled in — a 40% beat. Non-GAAP EPS came in at $0.19 vs $0.07 expected, against a $0.15 loss a year ago. Gross margin swung to 45% from 8% a year earlier.

The engine is a mouthful: indium phosphide (InP). AXT's InP revenue hit a record $30.7M — about 65% of total sales. InP is the base wafer the lasers inside high-speed optical transceivers are built on. As hyperscalers pack GPUs closer together, they need faster optical links (800G, now 1.6T modules) to shuttle data between chips — and that demand is running ahead of what AXT can currently make.

The kicker was guidance. AXT told investors to expect ~$66M in Q3 revenue vs the ~$39M street estimate (a ~70% raise) and EPS of $0.30–$0.32 vs ~$0.10. Backlog is north of $100M stretching into 2027, underpinned by multi-year supply deals and upfront prepayments from Coherent and Lumentum.

The ripple

AXT is the picks-and-shovels under the picks and shovels. The firms that buy its InP wafers — optical-component makers Coherent (COHR) and Lumentum (LITE) — are the direct read-through: AXT's capacity is literally part of their supply chain. The same AI-optics trade lifted Marvell (MRVL) ~21% that same Friday.

The one thing that flips it

The whole beat-and-raise leans on Chinese export permits. Management only guided the ~$66M it already holds permits for; the bigger upside needs more approvals it flatly calls "uncertain" on timing. Add ~45% share dilution from April's $632M raise and a 52-week range of $1.85–$143, and this is a volatile ride. Watch the next permit update and the Q3 print — if approvals stall, the upside case stalls with them.

As of Sun 02 Aug 2026, 09:41 IST; prices as of Friday's US close (Jul 31, 2026). Sources: Zacks / Yahoo Finance, TechStock2. For discussion and education only — not investment advice. Verify before acting.