AXT surges 14% as indium phosphide price hikes lift optics complex

AXT shares rose 13.71% to $92.83 on Monday, leading optics stocks after record indium phosphide price hikes of more than 10%.

"Customer demand continues to outpace supply no matter how fast we add capacity," Morris Young, CEO of AXT, told analysts on the company's Q2 earnings call.

Coherent climbed 8.12% and Lumentum added 6.79% as the InP supply squeeze rippled through the optical supply chain. AXT's Q2 revenue hit $47.6 million, up 164% year over year, with indium phosphide revenue at $30.7 million, the highest in company history, and non-GAAP gross margin expanding to 45.0%.

The InP shortage is an AI data-center story in disguise. NVIDIA disclosed 7.79 million Coherent shares valued at $3.07 billion in its August 14 13F filing, equal to 4.84% of its portfolio, while D.E. Shaw added to a 2.25 million-share AXT position valued at $162.2 million.

Record InP Price Hikes Reshape the Supply Chain

The United Daily News report out of Taipei detailed severe undersupply in InP substrates and epitaxial wafers, with Q4 price increases brewing at more than 10% — the largest on record. Earlier expectations had been for 3% to 5%. InP substrate prices began rising in Q4 of last year and have already been raised three times, now heading for a fourth consecutive increase. Epitaxial wafers have been raised twice and are heading for a third. A supplier is quoted saying even with money, buyers may not be able to secure supply.

AXT is the natural US-listed read-through as a leading producer of InP substrates. The company is targeting roughly $60 million per quarter in InP capacity exiting 2026 and about $130 million per quarter exiting 2027. Named Taiwanese beneficiaries in the report include Visual Photonics Epitaxy, LandMark Optoelectronics and IET-KY, none of which are US-listed.

Coherent and Lumentum Build Internal InP Capacity

Coherent and Lumentum are the demand side of the InP story. Both are building internal InP capacity while buying substrate from AXT. Coherent's CEO Jim Anderson said the company is on track to double internal InP output capacity by end of the current quarter, one quarter ahead of plan, with 80% year-over-year growth in InP laser production in the June quarter. Coherent's Q4 revenue printed at $2.05 billion, with fiscal Q1 guidance of $2.2 billion to $2.4 billion.

Lumentum flagged the AXT relationship directly. CEO Michael Hurlston told investors "we went out and we found additional substrate help from AXTI. They've been a great partner." Lumentum posted Q4 revenue of $1.01 billion, up 109% year over year, with non-GAAP gross margin at 50.4%, and guided Q1 revenue to roughly $1.25 billion.

A Mizuho note published Sunday said VR200 NVL72 ramps look strong, a tailwind for Lumentum and Coherent, and also for Wolfspeed on the power-supply side. Wolfspeed's Q3 update highlighted approximately 30% sequential growth in AI data center revenue.

For readers seeking broad optics exposure without single-stock risk, the Roundhill Photonics & Optics ETF (LYTE), which began trading in early August 2026, is also trading higher on Monday as the optics basket lifts. The InP squeeze is really an AI data-center story in disguise, and the optics complex's rally reflects the market pricing in sustained demand for optical connectivity across hyperscaler infrastructure buildouts.

This article is for informational purposes only and does not constitute investment advice.