AXT (AXTI) Stock Forecast & Price Target

AXT Inc. has demonstrated a significant operational turnaround, with operating margins increasing from (34.0%) to (1.4%) in the second quarter, primarily driven by a higher volume of sales and improved gross margins which rose to 22.4%, up from 8.2%. The company reported particularly strong growth in GaAs revenue, which surged 21% quarter-over-quarter to $7.5 million, supported by heightened demand for wireless RF devices, alongside a notable increase in InP revenue from $3.6 million to $13.1 million, attributed to a more favorable export license situation. Given these developments, the gross margin is projected to continue improving and revenue estimates for the calendar year 2026 have been revised upward, indicating a positive trajectory for AXT’s financial performance.

AXT Inc. faces a negative outlook primarily due to macroeconomic challenges such as rising oil and gas prices, which could dampen consumer spending, impacting the company's revenue. Additionally, the potential for declining gross margins is evident, as market prices may quickly fall, pressuring profitability within a short timeframe. The ongoing laser shortage in the optical industry serves as a further bottleneck, potentially limiting growth opportunities and the ability to achieve key financial milestones such as the desired quarterly run rates and gross margin targets in the coming years.