Assessing AXT (AXTI) Valuation As AI Data Center Demand Fuels Indium Phosphide Expansion

Simply Wall St.

Jun 10

AXT (AXTI) is back in focus after reporting robust revenue and backlog tied to indium phosphide substrates for AI and hyperscale data centers, alongside plans to double production capacity through ...

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See our latest analysis for AXT. Despite the strong AI related backdrop, AXT’s share price has been under pressure in the near term, with the stock down 13.68% over one day and 32.66% over 30 days, though its year to date share price return of 367.54% and very large 1 year total shareholder return indicate powerful longer term momentum from earlier enthusiasm. If you want to see how other AI focused plays are trading after big moves like this, it could be worth scanning 49 AI infrastructure stocks After such a sharp pullback following very large gains, AXT now trades below some analyst targets yet still carries rich expectations. Is there still a mispriced opportunity here, or is the market already baking in future growth? AdvertisementMost Popular Narrative: 155% Overvalued At a last close of $78.36 versus a narrative fair value of $30.75, the most followed thesis sees AXT priced well ahead of its modeled fundamentals, framed using a discount rate of 10.56%.  Accelerating global demand for high-speed data center connectivity and AI infrastructure is driving increased adoption of indium phosphide substrates, where AXT is a top supplier with 40% share. As export permit headwinds ease, this pent-up demand is expected to produce sharp revenue growth and improved utilization of manufacturing capacity.  Read the complete narrative. Curious how that growth story translates into today’s valuation gap? Revenue ramp, margin rebuild and a premium earnings multiple are doing the heavy lifting behind this fair value. The same narrative leans on forecasts for high revenue and earnings growth, together with a future profit margin profile and valuation multiple that differ meaningfully from current reported losses and market metrics. It is anchored on long term assumptions rather than recent volatility in the share price, and uses that 10.56% discount rate to pull those projections back into a present value estimate of $30.75 per share. Result: Fair Value of $30.75 (OVERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, still keep an eye on export permit uncertainty and heavy exposure to a concentrated Chinese customer base, as either factor could quickly challenge this optimism. Find out about the key risks to this AXT narrative. Another View: DCF Points the Other Way While the popular narrative pegs AXT as overvalued versus a $30.75 fair value, our DCF model presents a very different perspective. On this view, AXT at $78.36 is trading about 65% below an estimated future cash flow value of $222.66. This suggests the bigger risk could be underestimating the growth already priced in. For a closer look at how those cash flows and assumptions come together, Look into how the SWS DCF model arrives at its fair value. AXTI Discounted Cash Flow as at Jun 2026Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out AXT for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 46 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity. Next Steps With sentiment pulling in two directions, you do not have long to weigh up both sides and decide where you stand, so review the 2 key rewards and 3 important warning signs Looking for more investment ideas? If you stop your research here, you could miss stocks that better match your goals, so keep pushing for ideas that truly fit your approach.  Target potential mispricings by scanning 46 high quality undervalued stocks that combine quality fundamentals with prices that may not fully reflect them yet. Strengthen income potential by reviewing 9 dividend fortresses that focus on higher yields with an emphasis on stability. Protect your downside by assessing 63 resilient stocks with low risk scores that score well on resilience and risk controls.   This article by Simply Wall St is general in nature. We provide commentary based on historical data\n        and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your\n        financial situation. We aim to bring you long-term focused analysis driven by fundamental data.\n        Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.\n        Simply Wall St has no position in any stocks mentioned.New: Manage All Your Stock Portfolios in One PlaceWe've created the ultimate portfolio companion for stock investors, and it's free.• Connect an unlimited number of Portfolios and see your total in one currency• Be alerted to new Warning Signs or Risks via email or mobile• Track the Fair Value of your stocksTry a Demo Portfolio for FreeHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":false,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"isVideo":false,"video":null,"symbols":[],"gpt_button":0,"need_auth":false,"need_login_tip":false,"code":"91000000","status":"200"}}}