AXT shares rose 6.4% to $78.48 on Wednesday. The latest filing offers context for the move, at least on the income statement: six-month revenue jumped to $47.6 million from $18.0 million, and net income swung to $11.1 million from a $7.0 million loss.
Cash flow was different. Operating cash flow was still negative $900,000, even after gross profit climbed to $21.4 million from $1.4 million. AXT made money on paper and nearly broke even on the cash generated by the business.
The rebound also arrived with a policy hinge. AXT says demand for indium phosphide, or InP, wafer substrates used in data centers and passive optical networks increased after China granted additional export approvals.
"The substrate revenue increase for the six months ended June 30, 2026 as compared to the same period in 2025 was primarily the result of higher demand for InP wafer substrates used for data center applications and in passive optical networks, as a result of additional export approvals granted by the China government."
AXT, Form 10-Q, August 13, 2026
That sentence links the period's substrate revenue increase to two factors: customer demand and additional export approvals. The latter matters because the same filing says tariffs imposed by the United States and export controls implemented by China have affected revenue.
Europe supplied the clearest receipt. Revenue there increased $11.2 million, which AXT attributed primarily to new Chinese export approvals for InP and gallium arsenide, or GaAs, substrates and pBN crucibles.
"Revenue in Europe increased $11.2 million, primarily due to additional export approvals granted by the China government for our InP and GaAs wafer substrates and pBN crucibles sold by one of our consolidated subsidiaries, partially offset by lower demand for our Ge wafer substrates ."
AXT, Form 10-Q, August 13, 2026
The six-month gross margin reached 44.9%, up from 8.0%, while operating margin moved to 21.9% from negative 37.5%. Those are large changes, but the filing's cash lines add context to the operating picture.
Accounts receivable rose 60.9% year over year to $36.7 million, faster than inventory, which increased 20.3% to $96.3 million. Capital spending also rose to $8.6 million from $789,000. The filing does not say why receivables increased or why capex expanded, so the numbers are best read as additional cash-flow items alongside the rebound, not as a diagnosis.
There is another arithmetic complication: diluted shares increased 45.2% to 63.5 million. Cash stood at $412.2 million, up from $27.0 million, but the filing does not attribute that increase to operating performance. Profit improved sharply; the share base and balance-sheet movements changed too.
AXT's own annual results show why this period carries so much weight. Revenue was $88.3 million in 2025, after falling 11.1%, and operating margin was negative 24.9%. The latest six-month figures are therefore a sharp break from the recent annual baseline, though the export-approval exposure has not disappeared.
The next quarterly report's useful comparison is operating cash flow against the latest six-month reading of negative $900,000, alongside whether the $36.7 million receivables balance continues to move with the revenue rebound.
Source: AXT Form 10-Q filed August 13, 2026.