AXT, Inc

AXT, Inc (NASDAQ: AXTI) is a materials science company specializing in the development and production of advanced semiconductor wafer substrates. These substrates are made from high-performance compounds and single elements, including indium phosphide (InP), gallium arsenide (GaAs), and germanium (Ge).

Key Financial Updates:

• Revenue Decline and Product Mix Shift: AXT Inc. reported a notable year-over-year decline in revenue for the first quarter ended March 31, 2025, registering USD19.36 million compared to USD22.69 million in Q1 FY24. The reduction was primarily driven by lower substrate sales, which decreased from USD16.90 million to USD11.08 million, partially offset by growth in raw materials and other revenues, which rose from USD5.79 million to USD8.27 million. This shift reflects a changing demand profile across the company’s product segments, with a heavier tilt toward raw materials.
• Pressure on Gross Margins and Operating Loss: The company experienced significant margin pressure, resulting in a negative gross profit of USD1.24 million for the quarter, compared to a positive gross profit of USD6.09 million in the prior-year period. This deterioration stemmed from increased cost of revenue, which rose to USD20.60 million from USD16.59 million. Despite disciplined control over operating expenses—totaling USD9.03 million versus USD9.44 million in Q1 FY24—AXT posted a widened operating loss of USD10.28 million, compared to a USD3.35 million loss in the prior year.
• Bottom Line Impact and Net Loss: The company’s net loss attributable to AXT, Inc. increased substantially to USD8.80 million, or USD0.20 per share, compared to a net loss of USD2.08 million, or USD0.05 per share, in the same quarter last year. Factoring in income from joint ventures and other income sources, which were lower than in Q1 FY24, and net interest expenses, the company reported a pre-tax loss of USD9.94 million. After tax provisions, the total consolidated net loss stood at USD10.02 million.
• Cash Flow and Liquidity Position: AXT’s cash and liquidity profile showed improvement during the quarter. Cash, restricted cash, and equivalents increased from USD33.81 million at year-end to USD38.18 million as of March 31, 2025. This gain was driven by a net cash inflow from financing activities of USD6.88 million, largely attributable to short-term loan proceeds. However, the company used USD3.35 million in operating activities and USD0.79 million in investing activities, highlighting continued operational cash burn amid elevated R&D and infrastructure investments.
• Balance Sheet Highlights and Equity Changes: On the balance sheet front, total assets declined slightly to USD333.48 million from USD339.31 million at the end of FY24. Inventories decreased by USD4.67 million to USD80.41 million, while accounts receivable also dropped by USD2.78 million, reflecting more cautious revenue recognition or collection dynamics. Total liabilities increased to USD87.31 million, largely due to higher short-term loans. Stockholders’ equity decreased to USD208.05 million, impacted by the quarterly loss and slight foreign currency translation losses.
• Strategic Investments and Joint Ventures: AXT continued its strategy of leveraging joint ventures and strategic equity investments to secure its raw material supply chain. The company maintains significant holdings in several China-based entities through consolidated subsidiaries and equity investments, with ownership interests ranging from 25% to 85.5%. These ventures not only support operational integration but also yield dividends, contributing modestly to income. Additionally, capital expenditures continue at select locations to expand capacity and support future growth, particularly in regions like Dingxing and Kazuo.

Technical Observation (on the daily chart):

AXTI is showing bullish momentum, supported by a recent 21-day and 50-day moving average crossover and a rising RSI at 60.77, indicating growing strength without being overbought. The stock is trading above key moving averages, suggesting an uptrend, though current volume remains relatively low.

As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘Speculative Buy’ rating has been given to AXT, Inc (NASDAQ: AXTI) at the closing market price of USD 2.14 as of July 03,2025. 

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario. 

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is July 03,2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level that the stock is expected to reach as per the relative valuation method and or technical analysis taking into consideration both short-term and long-term scenarios.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the New York Stock Exchange (NYSE), NASDAQ Capital Markets (NASDAQ), and or REFINITIV. Typically, all sources (NYSE, NASDAQ, or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.