AXT has secured a $22.3 million advance from Coherent as part of a three-year supply agreement that locks in critical revenue and accelerates a production build-out in China. The prepayment, which will be offset against future wafer deliveries once Coherent meets minimum purchase commitments, is earmarked for expanding capacity at AXT’s Beijing facility to produce 6-inch indium phosphide substrates.
These specialized wafers are the backbone of optical data transmission in AI data centers, 5G infrastructure, and fiber-optic networks—end markets that continue to grow despite broader weakness in the semiconductor industry. AXT’s subsidiary Beijing Tongmei has already plowed $100 million into capacity expansion, and the Coherent deal provides additional demand visibility. The company’s order book for these materials now stands at roughly $50 million, with quarterly revenue from the segment surging 250% sequentially.
Market reaction masks deeper concerns
Shares jumped 7.56% on Friday to EUR 52.78, outperforming the Philadelphia Semiconductor Index, which slumped more than 5% over the same period. Yet the gain does little to erase deeper technical damage. At its current level, the stock remains 37% below its 50-day moving average of EUR 83.81 and 59% off the 52-week high of EUR 128.55. The relative strength index reads 36.2, indicating the stock is pressured but not oversold.
Should investors sell immediately? Or is it worth buying AXT?
Annualized volatility of 132% underscores the speculative nature of the name. AXT has been whipsawed by the AI-driven rally and subsequent correction, and the Coherent contract provides a degree of operational certainty that investors have been craving. Whether that’s enough to restore lasting confidence remains an open question.
What’s next for AXT
Management has guided for second-quarter earnings per share in the range of $0.06 to $0.08. The first quarter already beat expectations with a slim adjusted loss, and the Coherent deal should provide a tailwind to margins as capacity ramps. The full picture will emerge when AXT reports detailed quarterly results at the end of July. Until then, the stock’s trajectory hinges on whether the broader semiconductor sell-off recedes and whether the company can convert its order backlog into profitable deliveries.
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