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AXTI's AI-Driven Surge: Can Its Record Backlog Aid the Strong Uptrend?
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Key Takeaways
AXT's InP backlog hit a record $100M in Q1 2026, up from $60M in Q4 2025.
AXTI is benefiting from rising AI data center demand for optical transceivers and lasers.
AXT said export permit timing remains the biggest constraint on meeting strong demand.
AXT (AXTI - Free Report) appears increasingly well positioned to capitalize on the accelerating AI infrastructure buildout, with its indium phosphide (InP) backlog surpassing $100 million in the first quarter of 2026, up sharply from more than $60 million in the fourth quarter of 2025. Management described the backlog as a record high, providing meaningful visibility into future growth and positioning AXT at the center of the optical connectivity boom powering next-generation AI data centers.
The primary catalyst is the rapid expansion of AI data centers and hyperscaler capital spending, which is driving strong demand for optical transceivers, high-speed photodetectors and laser components used to enable faster data movement within AI clusters. AXT’s indium phosphide substrates are a key enabling material for electro-absorption modulated lasers (EMLs) and silicon photonics-based transceivers, both essential for scaling AI workloads. Management noted that multiple U.S. hyperscalers are already using products built on AXT materials, with adoption expected to broaden over time.
Customer engagement is evolving beyond short-term orders, as AXT highlights growing discussions around long-term supply agreements. These agreements are supported by deeper visibility into customer forecasts and encouragement from hyperscalers seeking supply-chain security. Management believes the optical components market could expand 4X to 6X over the next three to five years, with additional upside from emerging technologies such as co-packaged optics (CPO), beginning in late 2027 and beyond.
The company, however, emphasized that the timing of export permits remains the single biggest constraint on realizing demand, particularly for U.S.-related shipments. Although permit approvals improved in the first quarter and carried into the second quarter with better momentum, management cautions that the timing of issuances remains uncertain and beyond AXT’s control.
AXT’s record backlog suggests AI demand is no longer theoretical. The key question is whether export approvals can keep pace with surging customer demand and capacity expansion plans.
Peer Update
Coherent (COHR - Free Report) is seeing its growth increasingly shaped by the AI infrastructure boom, particularly through surging demand for indium phosphide-based optical components used in high-speed transceivers and co-packaged optics (CPO). Coherent reported that Datacenter & Communications revenues grew more than 40% year over year in third-quarter fiscal 2026, fueled by AI-driven optical networking demand.
To address industry-wide indium phosphide shortages, Coherent is aggressively expanding 6-inch indium phosphide capacity, expecting to double output by the end of calendar 2026 and more than double again in 2027. Management highlighted stronger yields, improving margins and growing long-term agreements with hyperscalers, reinforcing AI as Coherent’s central growth engine.
Amkor Technology (AMKR - Free Report) is benefiting from AI growth through rising demand for advanced integrated circuit packaging and testing, especially for high-performance computing and data center processors. Amkor Technology reported record first-quarter 2026 revenues of $1.68 billion, supported by strong momentum in AI data center applications and advanced packaging programs.
The company highlighted increasing adoption of HDFO packaging and advanced test solutions for next-generation CPUs powering AI workloads, with a major data-center CPU program beginning to ramp in 2026. Management expects computing growth to accelerate through 2026 and beyond as AI-driven integrated circuits require more sophisticated packaging architectures and higher-value manufacturing capabilities.
AXTI’s Price Performance, Valuation and Estimates
Shares of AXTI have skyrocketed 603.2% so far this year compared with the industry’s 40.4% growth.
Image Source: Zacks Investment Research
From a valuation standpoint, AXT trades at a forward price-to-sales ratio of 45.52, signifcantly above the industry average. It is also higher than its five-year median of 1.48. AXTI carries a Value Score of F.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for AXT’s fiscal 2026 earnings implies a 168.3% improvement from the year-ago period’s level.
View the Zacks #1 Rank List
Image: Bigstock
AXTI's AI-Driven Surge: Can Its Record Backlog Aid the Strong Uptrend?
Key Takeaways
AXT (AXTI - Free Report) appears increasingly well positioned to capitalize on the accelerating AI infrastructure buildout, with its indium phosphide (InP) backlog surpassing $100 million in the first quarter of 2026, up sharply from more than $60 million in the fourth quarter of 2025. Management described the backlog as a record high, providing meaningful visibility into future growth and positioning AXT at the center of the optical connectivity boom powering next-generation AI data centers.
The primary catalyst is the rapid expansion of AI data centers and hyperscaler capital spending, which is driving strong demand for optical transceivers, high-speed photodetectors and laser components used to enable faster data movement within AI clusters. AXT’s indium phosphide substrates are a key enabling material for electro-absorption modulated lasers (EMLs) and silicon photonics-based transceivers, both essential for scaling AI workloads. Management noted that multiple U.S. hyperscalers are already using products built on AXT materials, with adoption expected to broaden over time.
Customer engagement is evolving beyond short-term orders, as AXT highlights growing discussions around long-term supply agreements. These agreements are supported by deeper visibility into customer forecasts and encouragement from hyperscalers seeking supply-chain security. Management believes the optical components market could expand 4X to 6X over the next three to five years, with additional upside from emerging technologies such as co-packaged optics (CPO), beginning in late 2027 and beyond.
The company, however, emphasized that the timing of export permits remains the single biggest constraint on realizing demand, particularly for U.S.-related shipments. Although permit approvals improved in the first quarter and carried into the second quarter with better momentum, management cautions that the timing of issuances remains uncertain and beyond AXT’s control.
AXT’s record backlog suggests AI demand is no longer theoretical. The key question is whether export approvals can keep pace with surging customer demand and capacity expansion plans.
Peer Update
Coherent (COHR - Free Report) is seeing its growth increasingly shaped by the AI infrastructure boom, particularly through surging demand for indium phosphide-based optical components used in high-speed transceivers and co-packaged optics (CPO). Coherent reported that Datacenter & Communications revenues grew more than 40% year over year in third-quarter fiscal 2026, fueled by AI-driven optical networking demand.
To address industry-wide indium phosphide shortages, Coherent is aggressively expanding 6-inch indium phosphide capacity, expecting to double output by the end of calendar 2026 and more than double again in 2027. Management highlighted stronger yields, improving margins and growing long-term agreements with hyperscalers, reinforcing AI as Coherent’s central growth engine.
Amkor Technology (AMKR - Free Report) is benefiting from AI growth through rising demand for advanced integrated circuit packaging and testing, especially for high-performance computing and data center processors. Amkor Technology reported record first-quarter 2026 revenues of $1.68 billion, supported by strong momentum in AI data center applications and advanced packaging programs.
The company highlighted increasing adoption of HDFO packaging and advanced test solutions for next-generation CPUs powering AI workloads, with a major data-center CPU program beginning to ramp in 2026. Management expects computing growth to accelerate through 2026 and beyond as AI-driven integrated circuits require more sophisticated packaging architectures and higher-value manufacturing capabilities.
AXTI’s Price Performance, Valuation and Estimates
Shares of AXTI have skyrocketed 603.2% so far this year compared with the industry’s 40.4% growth.
Image Source: Zacks Investment Research
From a valuation standpoint, AXT trades at a forward price-to-sales ratio of 45.52, signifcantly above the industry average. It is also higher than its five-year median of 1.48. AXTI carries a Value Score of F.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for AXT’s fiscal 2026 earnings implies a 168.3% improvement from the year-ago period’s level.
Image Source: Zacks Investment Research
The stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.