The analyst reiterates a bullish stance on AXTI, expecting a sequential earnings beat and highlighting the company's strong market position and moat, while acknowledging dilution and geopolitical risks.
AXTI controls ~40% of the global InP market, provides the physical layer for high-speed optical transceivers, has a low capex capacity doubling advantage, and ongoing qualifications prove superior technology. Dilution risk and geopolitical exposure are noted downsides.
Some thoughts on $AXTI: Down 22% today, but that's nothing new if you've been invested for some time. Rollercoaster of a stock. But seeing plenty of panic on the TL. Some of it justified imo. So wanted to re-iterate some points: $AXTI is the gatekeeper of the AI interconnect. They provide the physical layer for 800G and 1.6T optical transceivers. Controlling ~40% of the global InP market in the process. Essentially, they're a really powerful company lol. Their moat is a low capex capacity doubling - repurposing existing GaAs lines to meet a $60M+ backlog while competitors face 2+ year lead times. > Q1 earnings is later this month. Personally will be expecting clean sequential beat. > Ongoing qualifications for 1.6T networking components will prove $AXTI's VGF crystal growth is superior to more traditional methods for high speed AI optics. Dilution risk is a huge downside though.... > Vote scheduled May 14th to increase shares from 70M to 120M. That's a valid overhang and personally, I'll take some profits if that gets authorized. > And naturally, geopolitical risks are real. 80%+ revenue from APAC, and factories in China. Basically $AXTI is a high beta proxy for US-China friction. R.e. recent insider selling - imo, it's just background noise. Not paying much attention to it.
| Horizon | Raw move | vs SPY |
|---|---|---|
| 1 day | +8.3% | +8.2% |
| 1 week | +58.3% | +54.1% |
| 1 month | +149.7% | +138.3% |
| 3 months | +51.3% | +37.3% |
| 6 months | — | — |