AXT, Inc. AXTI, based in California, is expanding its geographic reach, creating additional avenues for revenue growth beyond China. The company’s international revenue momentum was particularly strong in the first half of 2026, with Europe, Asia-Pacific, Japan and Taiwan all posting significant growth. Europe revenues surged 302.3% year over year, increasing its contribution to 20% of total revenues from 10% a year earlier. Revenues from Asia-Pacific excluding China, Taiwan and Japan jumped 369.5%, while Japan and Taiwan grew 111.5% and 81.7%, respectively.
The expansion is being supported by stronger demand for indium phosphide (InP) substrates and additional Chinese export approvals. In Europe, higher InP and GaAs shipments helped drive revenue growth, while Japan and Taiwan also benefited from additional approvals for InP products. Management said export-permit processing has become more regular in certain regions, while demand in those regions is also increasing.
China remains AXT's largest market, accounting for 64% of first-half revenues, but management expects the revenue mix to become more balanced as production capacity expands and long-term supply agreements are developed within China and throughout the rest of the world. China's contribution to revenues could account for 40%-60%.
However, North American revenues remain constrained by export restrictions. Still, the accelerating contribution from Europe and other Asian markets, alongside the Zacks Consensus Estimate of $217.6 million for 2026 revenues, indicates that geographic expansion is becoming an increasingly meaningful driver of future revenue growth.
AXT’s Market Expansion Faces Rising Photonics Rivalry
Coherent COHR is intensifying competition in AI-driven optical connectivity through its 6-inch indium phosphide platform, with internal InP output capacity expected to double and then more than double again by the end of 2027. COHR is also ramping 1.6T transceivers, CPO and NPO solutions, while its PhotonLink platform broadens its integrated-optics reach. This expansion could pressure AXT across the broader InP ecosystem.
Lumentum LITE is strengthening its position in high-speed optical connectivity through expanding EML and CW laser capacity at its InP wafer fabs. LITE is targeting 200G and 300G lane speeds, while 1.6T transceivers and OCS are gaining momentum. Its NPO and CPO laser technologies further expand its addressable optical market, increasing competitive pressure around InP applications.
AXTI’s Share Price Performance, Valuation & Estimates
AXTI has skyrocketed 1,467.8% over the past year, outperforming the broader Zacks Computer and Technology sector’s 22.3% growth.
AXTI’s One-Year Price Performance
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From a valuation standpoint, AXTI is trading at a premium, with a forward 12-month P/E ratio of 32.76X, significantly above the Electronics – Semiconductors industry multiple of 12.73X. The company carries a Value Score of F.
AXTI’s Valuation
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The bottom-line outlook for 2026 is encouraging, with the Zacks Consensus Estimate for earnings pegged at 86 cents per share, unchanged over the past 30 days, versus a loss of 41 cents in 2025.
Image Source: Zacks Investment Research
AXT stock currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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This article originally published on Zacks Investment Research (zacks.com).