Key Highlights

  • AXT's second-quarter 2026 Revenue was $47.6m, compared with $26.9m in the first quarter and $18.0m a year earlier.
  • GAAP Net Income attributable to AXT was $11.1m, or $0.17 per diluted share, against a $1.6m loss in the previous quarter.
  • Cash and cash equivalents were $412.2m at 30 June 2026, up from $120.3m at the end of 2025.

A sharp turn in the half-year

AXT, Inc. (NASDAQ:AXTI), a maker of compound semiconductor substrates including indium phosphide (InP), reported second-quarter 2026 results on 30 July 2026. Revenue was $47.6m, compared with $26.9m in the first quarter of 2026 and $18.0m in the second quarter of 2025. Six-month revenue was $74.5m.

The profit swing was larger still. GAAP net income attributable to AXT was $11.1m, or $0.17 per diluted share, against a net loss of $1.6m in the previous quarter and a loss of $7.0m a year earlier. Non-GAAP net income, which excludes items such as stock-based compensation, was $11.9m, or $0.19 per share.

For the six months ended 30 June 2026, GAAP net income was $9.5m, or $0.16 per diluted share, and non-GAAP net income was $11.3m, or $0.19 per share. Those totals are modest compared with the second-quarter figures alone, because the first quarter was loss-making.

The comparison matters for readers judging how durable the improvement is. One good quarter after a weak one establishes a direction, but a sequence of further quarters would be needed to show that the new run-rate is stable rather than a peak.

Margins and the Demand story

GAAP gross Margin was 44.9%, up from 29.6% in the first quarter and 8.0% in the second quarter of 2025. Non-GAAP gross margin was 45.0%. Higher volumes spread fixed Manufacturing costs across more output, which commonly lifts margins in capital-intensive businesses, although the company's release does not itemise every driver.

Management, paraphrasing the commentary of chief executive Morris Young, described the period as an inflection point. It said demand for data centre optical connectivity and new manufacturing capacity were producing a step change in revenue, and that the quarter delivered the highest InP revenue the company has recorded. These are management's characterisations.

Balance sheet and regulatory exposure

Cash and cash equivalents were $412.2m at 30 June 2026, up from $120.3m at the end of 2025. The company also reported $33.1m of restricted cash, $5.0m of short-term investments, $298.6m of Long-Term Investments and $84.2m of short-term loans. The rise in cash is substantial relative to the company's size, though the release alone does not explain its full composition.

The company lists the receipt of export permits for its InP substrates among the key risks and expectations in its forward-looking statements, without stating the current status. It also flags possible withdrawals or Redemption requests from Chinese Private Equity funds investing in its Tongmei subsidiary, administrative hurdles with Chinese government agencies, and US-China geopolitical tensions.

What to watch

The first point is whether revenue sustains the higher level seen in the second quarter. The release did not provide third-quarter guidance in the sections reviewed, so readers should check the company's later communications.

The second is the status of export permits for InP substrates, which the company itself identifies as a key uncertainty. The third is whether gross margin holds near 45% as the company adds capacity. A fourth is how management uses its larger cash position, including any further Capital Investment or changes in its China-based structure.