Pacific Ridge Capital Fully Exits AXT Stake
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Feb 18 2026
0mins
Source: Fool
- Stake Sale Overview: Pacific Ridge Capital Partners, LLC sold its entire stake in AXT, totaling 1,793,797 shares in Q4 2026, with an estimated transaction value of $17.1 million, reflecting a cautious outlook on AXT's future growth.
- Market Performance Analysis: Despite AXT's stock price soaring 853.6% over the past year, Pacific Ridge's exit indicates concerns over market volatility, particularly following a $0.5 million revenue drop in Q3 due to China's export restrictions.
- Future Growth Expectations: AXT anticipates revenue of $94 million in 2025, increasing to $124 million in 2026, showcasing strong potential driven by rising demand for specialized materials in data centers, despite facing potential market headwinds.
- Portfolio Adjustment: Pacific Ridge also reduced positions in several other small-cap companies, including Natural Gas Services and Heritage Insurance, indicating its ongoing strategy to seek undervalued investment opportunities.
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Analyst Views on AXTI
Wall Street analysts forecast AXTI stock price to fall
4 Analyst Rating
2 Buy
2 Hold
0 Sell
Moderate Buy
Current: 90.775
Low
18.00
Averages
21.33
High
26.00
Current: 90.775
Low
18.00
Averages
21.33
High
26.00
About AXTI
AXT, Inc. is a material science company that develops and manufactures high-performance compound and single element semiconductor wafer substrates comprising indium phosphide (InP), gallium arsenide (GaAs) and germanium (Ge). Its wafer substrates are used when a typical silicon wafer substrate cannot meet the performance requirements of a semiconductor or optoelectronic device. It has two product lines: specialty material substrates and raw materials integral to these substrates. Its InP is a semiconductor wafer substrate used in broadband and fiber optic applications, 5G infrastructure and data center connectivity. Its semi-conducting GaAs substrates are used to create opto-electronic products, including high brightness light emitting diodes that are often used to backlight wireless handsets and LCD televisions and for automotive, signage, and lighting applications. Its Ge substrates are used in applications, such as solar cells for space and terrestrial photovoltaic applications.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
AXTI Stock Investment Outlook Analysis
- Significant Revenue Growth: AXT, Inc. achieved $26.9 million in revenue for Q1 2026, marking a 39% year-over-year increase and a 17% sequential rise, primarily driven by surging demand for indium phosphide substrates used in high-speed optical transceivers, showcasing the company's strong performance in optical connectivity infrastructure.
- Margin Improvement: Indium phosphide revenue reached $13.6 million, with non-GAAP gross margin dramatically improving to 29.9% from negative levels a year earlier, indicating the company's strong operating leverage as it scales its business.
- Record Backlog: Management reported that indium phosphide backlog exceeded $100 million for the first time, with expectations for Q2 to set a new record for revenue, reflecting AXT's unique position within a rapidly expanding supply chain where demand outpaces capacity.
- Aggressive Capacity Expansion: AXT recently raised $632.5 million to aggressively expand production capacity, targeting a doubling of output by the end of 2026 and another doubling by the end of 2027, demonstrating strong confidence in future market demand.
See More
AXT CEO Sells Nearly 200,000 Shares
- Executive Sell-off: AXT's CEO Morris S Young sold 197,498 shares on June 1, 2026, which may raise concerns about the company's future performance, as executive sell-offs are often perceived as negative signals regarding company outlook.
- Market Reaction: Such sell-off actions could lead to a decline in investor confidence in AXT's stock, potentially impacting its price performance, especially in the current market environment where trust in executives is crucial for investor sentiment.
- Shareholding Structure Change: With the CEO's sell-off, AXT's shareholder structure may change, potentially affecting corporate governance and decision-making processes, particularly as a lower executive shareholding could increase the influence of external investors during key decisions.
- Future Outlook: Although the sell-off may trigger short-term market volatility, if the company can demonstrate strong performance growth and strategic execution in the future, it may still restore investor confidence and drive stock price recovery.
See More
AXT Inc. Stock Rallies 7.65% Amid Optimism
- Stock Recovery: AXT Inc. saw a 7.65% increase in stock price on Friday, closing at $123.78 per share as investors engaged in bargain-hunting after three consecutive days of losses, reflecting ongoing market optimism for the stock.
- Rescheduled Shareholder Meeting: The company announced the rescheduling of its 2026 Annual Stockholders’ Meeting to June 4, 2026, at 11 AM Pacific Time due to a lack of quorum, which may impact investor confidence in corporate governance.
- Improved Financial Performance: In the first quarter, AXT Inc. reduced its attributable net loss by 81% to $1.62 million, with an 84% decrease in operating loss to $1.585 million, while revenues surged by 39% to $26.9 million year-on-year, indicating significant financial improvement amid challenges.
- Optimistic Future Outlook: AXT Inc. expressed a highly optimistic outlook, anticipating strong demand from the booming artificial intelligence industry, with CEO Morris Young emphasizing the company's readiness to meet current and future customer and supply chain needs, showcasing strategic foresight.
See More
AXTI Q1 Earnings Beat Expectations, Analysts Raise Price Targets
- Significant Revenue Growth: AXT reported Q1 2026 revenue of $26.9 million, reflecting a 17% year-over-year increase that surpassed analyst expectations of $26.22 million, highlighting strong performance in the semiconductor market, particularly driven by surging demand for indium phosphide wafers.
- Analyst Price Target Increases: Wedbush raised its price target on AXT from $80 to $93 while maintaining an 'Outperform' rating, indicating that the first quarter's results signal a significant improvement in margins and suggesting substantial upside potential for the second quarter.
- Strong Stock Performance: AXT's stock has surged over 472% in 2026, reaching an all-time high of $96.32 last week, reflecting market optimism about its future growth, particularly fueled by demand in AI-focused data centers.
- Optimistic Profit Forecast: Management forecasts profitability in the upcoming quarter, projecting net income between $0.05 and $0.07 per share, indicating ongoing financial improvement amid strong demand for indium phosphide products.
See More
AXT Q1 2026 Earnings Call Insights
- Revenue Growth: Q1 2026 revenue reached $26.9 million, up from $23.0 million in Q4 2025, primarily driven by increased demand for Indium Phosphide, indicating strong performance in data center applications and potential for future revenue growth.
- Margin Improvement: The non-GAAP gross margin stood at 29.9%, with management linking profitability progress to sales volume and product mix, suggesting that a strategic focus on high-margin product lines will enhance overall profitability.
- Capital Expansion Plans: The company completed a $632.5 million capital raise to support Indium Phosphide capacity expansion and new product R&D, with plans to double Indium Phosphide capacity again by 2027, reflecting a proactive response to market demand and confidence in long-term growth.
- Future Outlook: Approximately $34 million in revenue is expected for Q2 2026, with GAAP and non-GAAP net income projected between $0.05 to $0.07 and $0.06 to $0.08 respectively, although uncertainties around export permit acquisition remain, management maintains an optimistic outlook on profitability prospects.
See More
Memory Stocks Decline in After-Hours Trading: SNDK Down 6%, WDC Down 8%; Software Stocks Surge with TEAM Rising 24% and TWLO Jumping 18%
Memory Stocks Decline: Memory stocks like SanDisk and Western Digital saw significant drops of 6% and 8% respectively, despite beating earnings expectations.
Software Stocks Surge: Atlasian shares rose by 24% following strong earnings, while Twilio's stock increased by 18% due to revenue growth in Q1.
Reddit's Positive Performance: Reddit's stock rose by 13% after Q1 results exceeded expectations, indicating strong market interest.
Roblox and AXT Inc. Trends: Roblox shares tumbled by 20% due to widening Q1 losses, while AXT Inc. reported revenue increases but saw a 7% drop in stock price during overnight trading.
See More
AXTI Stock Investment Outlook Analysis
- Significant Revenue Growth: AXT, Inc. achieved $26.9 million in revenue for Q1 2026, marking a 39% year-over-year increase and a 17% sequential rise, primarily driven by surging demand for indium phosphide substrates used in high-speed optical transceivers, showcasing the company's strong performance in optical connectivity infrastructure.
- Margin Improvement: Indium phosphide revenue reached $13.6 million, with non-GAAP gross margin dramatically improving to 29.9% from negative levels a year earlier, indicating the company's strong operating leverage as it scales its business.
- Record Backlog: Management reported that indium phosphide backlog exceeded $100 million for the first time, with expectations for Q2 to set a new record for revenue, reflecting AXT's unique position within a rapidly expanding supply chain where demand outpaces capacity.
- Aggressive Capacity Expansion: AXT recently raised $632.5 million to aggressively expand production capacity, targeting a doubling of output by the end of 2026 and another doubling by the end of 2027, demonstrating strong confidence in future market demand.
See More
AXT CEO Sells Nearly 200,000 Shares
- Executive Sell-off: AXT's CEO Morris S Young sold 197,498 shares on June 1, 2026, which may raise concerns about the company's future performance, as executive sell-offs are often perceived as negative signals regarding company outlook.
- Market Reaction: Such sell-off actions could lead to a decline in investor confidence in AXT's stock, potentially impacting its price performance, especially in the current market environment where trust in executives is crucial for investor sentiment.
- Shareholding Structure Change: With the CEO's sell-off, AXT's shareholder structure may change, potentially affecting corporate governance and decision-making processes, particularly as a lower executive shareholding could increase the influence of external investors during key decisions.
- Future Outlook: Although the sell-off may trigger short-term market volatility, if the company can demonstrate strong performance growth and strategic execution in the future, it may still restore investor confidence and drive stock price recovery.
See More
AXT Inc. Stock Rallies 7.65% Amid Optimism
- Stock Recovery: AXT Inc. saw a 7.65% increase in stock price on Friday, closing at $123.78 per share as investors engaged in bargain-hunting after three consecutive days of losses, reflecting ongoing market optimism for the stock.
- Rescheduled Shareholder Meeting: The company announced the rescheduling of its 2026 Annual Stockholders’ Meeting to June 4, 2026, at 11 AM Pacific Time due to a lack of quorum, which may impact investor confidence in corporate governance.
- Improved Financial Performance: In the first quarter, AXT Inc. reduced its attributable net loss by 81% to $1.62 million, with an 84% decrease in operating loss to $1.585 million, while revenues surged by 39% to $26.9 million year-on-year, indicating significant financial improvement amid challenges.
- Optimistic Future Outlook: AXT Inc. expressed a highly optimistic outlook, anticipating strong demand from the booming artificial intelligence industry, with CEO Morris Young emphasizing the company's readiness to meet current and future customer and supply chain needs, showcasing strategic foresight.
See More
AXTI Q1 Earnings Beat Expectations, Analysts Raise Price Targets
- Significant Revenue Growth: AXT reported Q1 2026 revenue of $26.9 million, reflecting a 17% year-over-year increase that surpassed analyst expectations of $26.22 million, highlighting strong performance in the semiconductor market, particularly driven by surging demand for indium phosphide wafers.
- Analyst Price Target Increases: Wedbush raised its price target on AXT from $80 to $93 while maintaining an 'Outperform' rating, indicating that the first quarter's results signal a significant improvement in margins and suggesting substantial upside potential for the second quarter.
- Strong Stock Performance: AXT's stock has surged over 472% in 2026, reaching an all-time high of $96.32 last week, reflecting market optimism about its future growth, particularly fueled by demand in AI-focused data centers.
- Optimistic Profit Forecast: Management forecasts profitability in the upcoming quarter, projecting net income between $0.05 and $0.07 per share, indicating ongoing financial improvement amid strong demand for indium phosphide products.
See More
AXT Q1 2026 Earnings Call Insights
- Revenue Growth: Q1 2026 revenue reached $26.9 million, up from $23.0 million in Q4 2025, primarily driven by increased demand for Indium Phosphide, indicating strong performance in data center applications and potential for future revenue growth.
- Margin Improvement: The non-GAAP gross margin stood at 29.9%, with management linking profitability progress to sales volume and product mix, suggesting that a strategic focus on high-margin product lines will enhance overall profitability.
- Capital Expansion Plans: The company completed a $632.5 million capital raise to support Indium Phosphide capacity expansion and new product R&D, with plans to double Indium Phosphide capacity again by 2027, reflecting a proactive response to market demand and confidence in long-term growth.
- Future Outlook: Approximately $34 million in revenue is expected for Q2 2026, with GAAP and non-GAAP net income projected between $0.05 to $0.07 and $0.06 to $0.08 respectively, although uncertainties around export permit acquisition remain, management maintains an optimistic outlook on profitability prospects.
See More
Memory Stocks Decline in After-Hours Trading: SNDK Down 6%, WDC Down 8%; Software Stocks Surge with TEAM Rising 24% and TWLO Jumping 18%
Memory Stocks Decline: Memory stocks like SanDisk and Western Digital saw significant drops of 6% and 8% respectively, despite beating earnings expectations.
Software Stocks Surge: Atlasian shares rose by 24% following strong earnings, while Twilio's stock increased by 18% due to revenue growth in Q1.
Reddit's Positive Performance: Reddit's stock rose by 13% after Q1 results exceeded expectations, indicating strong market interest.
Roblox and AXT Inc. Trends: Roblox shares tumbled by 20% due to widening Q1 losses, while AXT Inc. reported revenue increases but saw a 7% drop in stock price during overnight trading.
See More
