AXT Inc. (NASDAQ:AXTI) saw its share price climb by 11.49 percent on Wednesday to close at $64.30 apiece after it was named as one of the five semiconductor beneficiaries in the accelerating co-packaged optics sector.
Following a five-day visit to Semicon Taiwan 2026, investment firm Needham & Company underscored the huge role of co-packaged optics in helping debottleneck artificial intelligence networks through 2028 and beyond, and that AXT Inc.’s (NASDAQ:AXTI) indium phosphide substrate is at the center of it.
Apart from AXT, Needham also named Coherent Corp. and Lumentum Holdings as among the similar beneficiaries, signaling a more bullish rating across the industry.
Last July, Needham upgraded AXT to buy from hold, while issuing a $90 price target. The price target still held a 56 percent upside potential from its closing price of $64.30 on Wednesday.
Photo by Mizuno K on Pexels
Business Updates Expected Next Week
Investors are expected to watch out for business updates from AXT Inc. (NASDAQ:AXTI) next week as it participates in Morgan Stanley ASIA Best Corporate Day on Monday and Tuesday, September 21 to 22.
Among the cues to look out for are any guidance on its financial performance in the third quarter of the year, as the period comes to a close.
Additionally, investors are expected to watch out for updated operational and financial guidance for the remainder of the year.
Stellar Q2
In the second quarter alone, the listed firm swung to a net income of $13.03 million from a $7.67 million net loss in the same period last year.
Total revenues more than doubled to $47.59 million from $17.97 million year-on-year, thanks to record revenues from indium phosphide.
AXT Inc. (NASDAQ:AXTI) attributed the results to strong customer demand for data center optical connectivity, which complemented its manufacturing capacity and improving productivity.
Hedge Fund Conviction Strengthens
Institutional conviction remained strong for the stock in the second quarter of the year despite a drop in the number of hedge fund holders during the period.
Data from Insider Monkey said that 33 hedge funds held positions in AXT Inc. (NASDAQ:AXTI) in the second quarter, down from 37 in the first quarter of the year.
However, the remaining investors propped up their committed capital by 34 percent to $487.9 million from $363.7 million quarter-on-quarter, signaling that they remained bullish about the long-term growth prospects for the stock.
While we acknowledge the potential of AXTI as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
…
Read More: AXT Inc. (AXTI) Draws Bullish Analyst Attention — Here’s Why
