Highlights

  • Cash and cash equivalents were $412.2 million at 30 June, against $120.3 million at the end of 2025.
  • AXT closed at $57.91 on Thursday 15 October 2026, down $3.68, or 5.97%, In the reported figures.
  • The movement does illustrate how volatile the stock has been, which sits alongside the unresolved export-permit and China-related risks above.
  • The next scheduled event is the third-quarter release on 29 October.

AXT (NASDAQ:AXTI), a maker of compound semiconductor substrates, has two recent items of note. On 29 July 2026 it announced a long-term supply and capacity-reservation agreement with Lumentum Operations for indium phosphide (InP) wafer substrates. On 1 October it said it would publish third-quarter 2026 results on 29 October.

Under the Lumentum agreement, AXT will reserve a minimum annual InP volume from signing through 31 December 2031 and support any additional capacity Lumentum requires. Lumentum will pay an initial deposit of $43.5 million within 30 business days of signing, with a further $43.5 million to be agreed during calendar 2028. Both deposits act as shipment credits against Lumentum's purchases until used. The agreement matters because it ties part of AXT's capacity to a named customer for more than five years and brings cash forward through deposits. As described, the deposits operate as shipment credits, so the benefit to reported sales depends on deliveries.

Second-quarter results

Reported on 30 July, second-quarter revenue was $47.6 million, compared with $26.9 million in the first quarter and $18.0 million a year earlier, a rise of about 77% on the first quarter and 164% on a year earlier. GAAP gross margin was 44.9%, up from 29.6% in the first quarter. Net income attributable to AXT was $11.1 million, or $0.17 per diluted share ($0.19 non-GAAP), against a net loss of $1.6 million in the first quarter and $7.0 million a year earlier.

Chief executive Morris Young said AXT has reached an "inflection point in our business", citing data-centre optical connectivity demand and added capacity. The quarter was the company's highest for InP revenue. The release did not include third-quarter guidance.

Balance sheet and stated risks

Cash and cash equivalents were $412.2 million at 30 June, against $120.3 million at the end of 2025. AXT also reported $298.6 million of long-term investments, $5.0 million of short-term investments, $33.1 million of restricted cash and $84.2 million of short-term loans. The release does not set out in the passages reviewed what drove the increase in cash.

AXT is explicit about risks. It cites export permits for indium phosphide substrates, withdrawals or redemption requests by private equity funds in China linked to its Tongmei subsidiary, administrative challenges with Chinese government agencies, and US-China geopolitical tension. Any change in these could affect shipments and reported results. These risks were noted by AXT in the second-quarter release, rather than new developments flagged by outsiders.

Share price context

AXT closed at $57.91 on Thursday 15 October 2026, down $3.68, or 5.97%, In the reported figures. Recent closes were $61.59 on 14 October, $64.63 on 13 October, $61.98 on 12 October and $68.46 on 9 October, so the shares have fallen roughly 15% in four sessions.

The movement does illustrate how volatile the stock has been, which sits alongside the unresolved export-permit and China-related risks above.

What to watch

The next scheduled event is the third-quarter release on 29 October. The key questions are whether InP revenue continues to rise from the record second-quarter level, whether gross margin holds near 45%, and whether Lumentum's initial $43.5 million deposit has been received as the contract describes.

Readers may also look for further detail on capacity additions, the status of export permits, and any update on the Tongmei fund redemption issue. Those are risks management has flagged itself, and the absence of formal guidance means the company's own commentary on the call will carry weight. Investors should also separate GAAP from non-GAAP measures: the $0.02 gap between the two EPS figures reflects stock-based compensation excluded from the latter.