$AXTI

Summary

The analyst provides a positive analysis of AXTI's Q1 earnings and capital raise but states they are undecided on their position and currently holding.

Reasoning

Strong revenue and EPS growth, successful capital raise enabling capacity expansion, positive outlook on China export permits and market growth, backlog at record high, capacity expansion ahead of plan.

$AXTI Q1 2026 Earnings breakdown: Revenue $26.9M, +39% YoY EPS ($0.03), +85% YoY On capital raise: "Last week we completed a capital raise for $632.5M in support of Tongmei’s InP capacity expansion" "The message we have for them is this: AXT is stepping up. We believe we are in the best position to support and enable our industry in meeting the current and future needs." So $AXTI no longer has to throttle growth because of a crappy balance sheet. Instead, they can now 2x InP capacity in 2026, and plan the next doubling for 2027-2028. On China export permits: - Export permits “came in at slightly better than our guidance” Which enabled the revenue beat + InP revenue jump to $13.6M (~51% of total revenue) CEO said that China’s InP laser market more than doubled in Q1 and is expected to double again in Q2. High tailwinds linked to China’s own AI infra buildout. And de-risks a large portion of the backlog + gives $AXTI an edge vs. non-China competitors who lack local manufacturing. R.e. fwd guidance on export permits: - “We could see upside, even significant upside" if additional permits arrive for orders already in backlog. W/ InP backlog now at >$100M (record high). Capacity expansion also remains “ahead of plan” to meet demand. Imo, Q1 outcome was better than many feared. Visibility has improved + domestic China ramp provides a natural hedge. Will defo need to keep an eye on Q2 shipment trends. Will highlight whether they've got a smooth ramp or lumpy. R.e. my position, I'm not decided what I'll do yet. Holding for now.

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