AXTI: Why is this almost unknown materials company up +5,500% in one year — and still barely known in Sweden?
AXTI has 366 owners on Avanza trading platform
Summary
AXT Inc. is up roughly 5000% in a year.
Not because of earnings. Not because of profitability. But because the market believes it sits at a hidden bottleneck in AI infrastructure:
Indium Phosphide (InP) — the material enabling high-speed optical networking.
AXT has 366 owners on Avanza trading platform (which I guess has 30-50% of the retail traders in Sweden). Congratulations to you all, I missed this one.
Why This Matters for Swedish Investors
If you follow NVIDIA or AMD, you already understand how fast AI compute is scaling. Driven by hyperscalers that will invest $1 trillion according to Dagens Industi (DI)
And if you know Sivers Semiconductors, you’ve seen how InP is used in photonics laser arrays further down the stack from the mega companies. $SIVE has approximately 17.500 Avanza shareholders to compare with ATX.
AXT sits downstream for example Lumentum. It supplies the raw substrate there lasers are grown on. As far as I know Sivers doesn’t use ATX for substrates for 3-4” production today, they historical use IQE for EPI waffers and substrates. Possibly WIN Semiconductors could, Sivers volume production partner for AI Photonics, I have not investigated this.
The Story Behind the 5000% Move
As AI clusters scale, data movement becomes the bottleneck. Copper interconnects stop scaling efficiently.
So the industry shifts to optical networking.
Companies like Marvell and Lumentum are driving the transition from 800G to 1.6T and CPO and beyond. The optical market could grow from roughly $18B to $90B+ by 2030.
At the same time, the underlying material is changing.
Indium Phosphide is going from around 40% of optical lanes today to ~90% by 2030.
This is not just growth — it’s a technology shift and big future bottleneck.
Where AXT Sits in the Stack
AI Compute
NVIDIA
AMD
Networking / Optical Chips
Marvell
Optical Components including InP
Lumentum & Coherent
InP Lasers and arrays
Sivers Semiconductors
Epitaxy
IQE
Substrate
AXT
Sumitomo Electric
Raw Materials
InP supply
Key Insight
AXT sits at the deepest layer — where supply can be bottleneck if upstream grows quickly. Traditionally this layer has been challenged with lower gross margins.
What the Market Is Pricing In
At roughly a $3.5B valuation, the market assumes:
InP demand explodes
AXT scales production successfully
Gross margins expand from current 29% (Q1 2026) toward 40–45%
Supply becoming even more constrained
In the 2026 Q1 report, 30th April 2026. The company shared that InP backlog has climbed to “a new high of over $100 million” and that AXT is “running ahead of our plan to double our Indium Phosphide capacity this year from Q4 of 2025 levels.”
They also outlined additional expansion: “Beyond our 2026 capacity expansion, we’re planning to double our Indium Phosphide capacity again in 2027 with a new facility near our current one that we will be dedicated to Indium Phosphide wafer production.”
In the Q&A, they provided a revenue-based capacity framing, saying AXT expects to reach “about $35 million per quarter capability by the end of 2026” for InP, after having increased capacity about 25% in Q4 2025 and aiming to double that in 2026. VP of Business Development Tim Bettles added that after completing the next phase of expansion, “by the end of 2027, maybe early 2028,” AXT expects to be “somewhere in the region of $65 million-$70 million of capacity per quarter.” They also said the company is also planning for 2028 expansion and noted that “scale matters” in the InP market and that barriers to entry are high
In short, AXT is being priced for extreme growth and a bottleneck supplier to the AI Photonics economy where the need for InP materials and lasers will be key. No InP - No Lasers -No Photons - NoAI.
Final Take
AXT is in the right place at the right time. The Avanza pepole who found it earlier or around a year ago. At 1st of May 2025 AXT was $1.35 → now at +$70, they have had a crazy ride. Congratulations to all 366 that might have been on that journey. I missed that journey, but I should have paid attention.
Anders Storm
Disclaimer: This newsletter is NOT investment advice. The aim of this newsletter is to provide subscribers with basic and simplified insights about the semiconductor industry and its participants. Disclosure: I have no position in AXTI.
Articles will be published semi-frequently.