AXT (AXTI) Stock Forecast & Price Target

AXT Inc. has shown a significant recovery as evidenced by the increase in operating margin from (34.0%) to (1.4%) in the second quarter, primarily driven by higher volume and improved gross margins. The gross margin improved notably to 22.4% from 8.2% in the previous quarter, supported by a favorable product mix and increased demand for independent semiconductor materials, particularly GaAs and InP, which saw quarterly revenue jumps of 21% and substantial growth from $3.6M to $13.1M, respectively. The company is positioned for solid growth, benefiting from increasing demand for III-V materials, underscoring its strategic relevance in the evolving semiconductor market.

AXT Inc. has reported a significant decline in total revenues, which reached $18.0 million in Q2, representing a 7.4% decrease quarter-over-quarter and a notable 35.6% decrease year-over-year. Additionally, raw material sales fell by 20% quarter-over-quarter and 19% year-over-year, contributing to concerns about the company's declining profitability, particularly as raw materials now constitute approximately 38% of total revenues, well above the five-year average of 25%. Furthermore, AXT faces substantial operational challenges, including delays in export licenses which are expected to hinder performance and limit sales, compounded by macroeconomic factors such as rising oil and gas prices and potential drops in consumer spending.