AXT (AXTI) is back in focus after first quarter 2026 results showed sales of US$26.92 million, a sharply smaller net loss, and management guidance pointing to a possible move into profit in the next quarter.

The strong first quarter update, AI data center backlog and sizeable capital raise have coincided with a sharp shift in sentiment, with AXT’s 30 day share price return of 138.5% and very large 1 year total shareholder return suggesting strong recent upside momentum.

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With the stock up very strongly over 30 days and trading above the average analyst price target, yet still screening at an intrinsic discount, the key question now is simple: is there still an opportunity for investors here, or is the market already pricing in years of future growth?

Most Popular Narrative: 253% Overvalued

AXT’s most followed narrative pegs fair value at $30.75, well below the last close of $108.42, creating a wide gap between story and price.

Diversification into new end markets such as sensors, automotive (LiDAR, ADAS), and emerging applications (quantum computing, silicon photonics) positions AXT to broaden its revenue base and reduce customer concentration risk, supporting longer-term revenue and earnings growth.

Curious what earnings, revenue trajectories and margin rebuild would need to look like for this view to stack up? The narrative relies on strong growth, wider margins and a richer future multiple that is not obvious from today’s income statement.

Result: Fair Value of $30.75 (OVERVALUED)

However, export permit uncertainty and reliance on a concentrated Chinese customer base still sit in the background as potential spoilers for the bullish story.

Another Way to Look at Value

While the most popular narrative points to AXT being 253% overvalued at $108.42 based on long term growth and margin assumptions, the SWS DCF model arrives at a fair value of $229.77, which implies the stock is trading at a sizeable discount to its estimated future cash flows.

These are two very different answers to the same question. Which set of assumptions do you find more convincing when you think about AXT’s future cash generation and risk profile, and how comfortable are you backing one over the other?

Simply 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 51 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 such mixed signals around AXT, now is the moment to look through the numbers yourself and decide how comfortable you are with the balance of risk and reward. To help you weigh both sides in detail, start with the 2 key rewards and 3 important warning signs.

Ready to hunt for your next idea?

If AXT has opened your eyes to what is possible, do not stop here, broaden your opportunity set now or risk missing the next move.

• Explore potential long-term compounding by checking companies that look mispriced on quality and value using the 51 high quality undervalued stocks.
• Review your income stream by scanning for stocks with sizeable yields and resilient payouts through the 12 dividend fortresses.
• Focus on resilience by concentrating on companies with robust finances and steady fundamentals using the solid balance sheet and fundamentals stocks screener (44 results).

This article by Simply Wall St is general in nature. We provide commentary based on historical data 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 financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.