AXT's Leveraged ETF Debut and Lumentum Contract Add Fresh Fuel to a Blistering AI-Driven Rally
Published on 08/17/2026 at 17:32 | Redaktion boerse-global.de
The semiconductor materials specialist has become one of the most closely watched names in the AI infrastructure trade, and the action shows no signs of cooling. AXT's shares jumped another 12% on Monday, extending a rally that has seen the stock more than quintuple since the start of the year, as investors digested a flurry of catalysts ranging from new derivative products to a long-term supply agreement with a key industry partner.
New Leveraged Instruments Hit the Market
Tradr ETFs is set to launch the first leveraged and inverse single-stock exchange-traded funds tied directly to AXT on Tuesday, according to media reports. The new products, trading under the tickers AXTX and AXTQ, will give investors two-times leveraged exposure to the stock's daily moves — a development that typically attracts fresh attention and trading volume to the underlying security.
The timing coincides with a wave of analyst enthusiasm. Northland Capital Markets lifted its price target on the stock from $90.00 to $125.00 while reaffirming an "Outperform" rating, citing an order backlog exceeding $100 million for indium phosphide (InP) substrates. Those specialized materials are increasingly critical for optical connectivity in data centers optimized for artificial intelligence workloads.
A Supply Deal That Runs to 2031
The Northland call builds on a more concrete development disclosed alongside the company's second-quarter results on August 10. AXT announced a long-term supply agreement with Lumentum Operations for indium phosphide wafer substrates, with capacity reservations extending through 2031. The deal is backed by prepayments totaling $87.5 million, which will be applied as credits against future deliveries — effectively locking in predictable utilization for AXT's strategically important segment for years to come.
That partnership helps explain the broader strength across the optical connectivity space. Lumentum's own quarterly results and outlook lifted sentiment across the sector last week, with AXT shares advancing 5.4% on Friday as part of that industry-wide move.
Should investors sell immediately? Or is it worth buying AXT?
Record Quarter and a Blowout Outlook
The fundamentals underpinning the rally are substantial. AXT posted record second-quarter 2026 revenue of $47.6 million, up 164.8% year over year, with the indium phosphide business contributing $30.7 million of that total. The company swung to profitability with net income of $11.1 million, or $0.19 per share.
The forward guidance, however, is what truly caught the market's attention. Management projected third-quarter revenue of $66 million — a figure that towers over the consensus estimate of $38.8 million. On a GAAP basis, the company expects earnings per share in a range of $0.29 to $0.31 for the current quarter.
The outsized guidance prompted Zacks Investment Research to upgrade the stock from "Hold" to "Strong Buy," pointing to the significant upward revisions in earnings expectations following the quarterly report. Earlier in the month, Needham raised its rating to "Buy" with a $90 price target on August 5, while B. Riley maintained a neutral stance with a $52 target on the same day.
Institutional Conviction Builds
Large investors are increasingly positioning for further upside. Bank of America expanded its AXT position by 112% during the first quarter, bringing its holdings to over 776,000 shares, according to regulatory filings. Jane Street Group also disclosed a passive stake of 6.7% on Wednesday.
The stock currently trades roughly 33% above its 50-day moving average, a reflection of how far and how fast the move has run. That premium has narrowed from earlier levels following some profit-taking last week, but the underlying trend remains firmly intact.
Strategic Shifts and Balance Sheet Strength
Management has also been making structural adjustments behind the scenes. The planned initial public offering of subsidiary Tongmei has been redirected to the Hong Kong Stock Exchange, and AXT has raised additional capital through a secondary share placement to fund capacity expansion and operations. The company amended its charter to lower the quorum requirement for shareholder meetings to one-third of voting shares, a move designed to facilitate easier decision-making going forward.
Investors have largely shrugged off potential overhangs from the Tongmei IPO withdrawal, with AXT stating last Thursday that it has sufficient liquidity to cover potential investor redemption requests of approximately $49 million. With a market capitalization of around €4.63 billion, the company has cemented its position as a meaningful player in specialized semiconductor substrates — and the market is betting that the AI-driven demand for its materials has only just begun to be priced in.
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