Ticker

Bond yields have the entire stock market on edge. The last thing most investors are thinking about is short squeezes, which means maybe they should be something contrarian trades have on their radar.

Four weeks ago, AXT reported much better-than-expected second-quarter results and provided a strong guidance for Q3. Main Chinese operating subsidiary Tongmei abandoned plans to list on the Shanghai STAR market and is now pursuing a Hong Kong listing. In recent months, increasing hyperscaler capex scrutiny has resulted in a sharp correction of AI infrastructure stocks.

AXT is experiencing rapid growth driven by surging indium phosphide (InP) demand for AI and optical data transmission. Q2 2026 revenue soared 77% sequentially to $47.6 million, with record InP sales and substantial gross margin expansion to 44.9%. Strong operating leverage is evident, as non-GAAP net income reached $11.9 million versus a $0.15 loss per share a year ago.

AXTI's expanding InP supply agreements, backed by customer deposits and commitments through 2031, improve shipment visibility and could support revenue growth.

AXT (AXTI) appears to have found support after losing some value lately, as indicated by the formation of a hammer chart. In addition to this technical chart pattern, strong agreement among Wall Street analysts in revising earnings estimates higher enhances the stock's potential for a turnaround in the near term.