AXT, Inc. (NASDAQ:AXTI) stock declined 11.4% after the compound semiconductor substrates maker revised down its revenue forecast for the second quarter, citing slower issuance of export permits and softer demand from China.
The company now anticipates preliminary Q2 2025 revenue between $17.5 million and $18 million, lower than its earlier guidance of $20 million to $22 million provided on May 1, 2025. The reduction mainly reflects delays in export controls for gallium arsenide products and weakening demand in the Chinese market.
“Though we continue to feel confident about our participation in a number of exciting technology trends, the current geopolitical environment remains challenging across our business,” said CEO Morris Young. He also highlighted that AI-related demand for indium phosphide in China increased during the quarter despite the overall revenue headwinds.
AXT further reported that its subsidiary, Beijing Tongmei Xtal Technology Co., obtained its first export control permits for indium phosphide late in the quarter. Despite the revenue shortfall, the company expects gross margins to remain in the high single digits for Q2 2025.
B. Riley analyst David Kang lowered his price target on AXT to $4.30 from $4.50 while keeping a Buy rating. Kang noted, “Lowering PT from $4.50 to $4.30 based on an unchanged EV/sales multiple of 1.8x our 2026 revenue estimate, less net debt.”
AXT is set to release its full Q2 financial results on July 31, 2025.
This content is for informational purposes only and does not constitute financial, investment, or other professional advice. It should not be considered a recommendation to buy or sell any securities or financial instruments. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. You should conduct your own research and consult with a qualified financial advisor before making any investment decisions.