AXT Shares Plunge 10.99% as Revised Revenue Outlook and Permit Delays Push Trading Activity to 271st Rank

Market Snapshot

On January 9, 2026, AXT Inc. (AXTI) shares fell 10.99%, marking a significant decline amid revised revenue expectations for the fourth quarter of 2025. The stock traded with a volume of $0.43 billion, ranking 271st in daily trading activity. This sharp drop follows the company’s announcement of a downward revision to its Q4 2025 revenue forecast, which now projects $22.5 million to $23.5 million—well below its prior guidance of $27 million to $30 million and the $28.77 million consensus estimate. The decline reflects investor concerns over supply constraints tied to Chinese export permit delays for indium phosphide substrates, a critical component in AXT’s product lineup.

Key Drivers Behind the Decline

The primary catalyst for AXT’s stock plunge is the company’s revised Q4 revenue outlook, attributed to fewer export control permits for indium phosphide substrates issued by China’s Ministry of Commerce. These permits are essential for fulfilling customer orders in markets such as AI infrastructure and high-speed optical connectivity. CEO Morris Young acknowledged the unmet demand, stating the company was “disappointed” but remains engaged with Chinese authorities to resolve the permitting bottleneck. The shortfall directly impacted December shipments, reducing revenue visibility for the quarter and eroding investor confidence.

Compounding the issue, the revised forecast contrasts with strong performance in prior quarters. AXT’s third-quarter 2025 results exceeded expectations, with revenue of $28 million—surpassing the projected $19.84 million by 41.13%—and a net loss of $0.03 per share, outperforming the anticipated $0.12 loss. This divergence between past outperformance and current challenges highlights the volatility of AXT’s business model, which is heavily dependent on export-driven demand for specialized semiconductor materials. Analysts at B.Riley downgraded the stock to “Neutral” from “Buy,” citing valuation concerns despite robust demand fundamentals.

The capital raise completed in December—raising $100 million through the issuance of 8.16 million shares—was intended to fund capacity expansion for indium phosphide substrates. While the CEO emphasized plans to more than double production capacity by late 2026, the immediate impact of permit delays has overshadowed these long-term growth initiatives. The capital raise, however, provides a buffer to sustain operations and R&D efforts amid regulatory hurdles.

Investor sentiment is further clouded by the timing of export permit approvals, which often lag behind quarterly reporting cycles. Young noted that permit issuance is “unpredictable” and may not align with AXT’s financial reporting periods, creating a mismatch between operational execution and revenue recognition. This uncertainty has prompted analysts to lower revenue estimates for 2025 and 2026, with B.Riley reducing its 2025 projection to $88 million from $95 million and its 2026 forecast to $119 million from $126 million.

The stock’s decline also reflects broader market skepticism about AXT’s ability to scale operations profitably. Despite strong demand for indium phosphide in AI and data center applications, the company’s financial metrics remain under pressure, with a net loss per share of -$0.53 over the past year and gross profit margins of 11.97%. These figures underscore the challenges of capital-intensive manufacturing in a sector with high regulatory and logistical risks.

Looking ahead, AXT’s February 19, 2026, earnings release and its presentation at the 28th Annual Needham Growth Conference on January 14, 2026, will be critical for reassessing investor sentiment. The company must demonstrate progress in resolving permit issues and executing its capacity expansion plans to restore confidence in its long-term growth trajectory. For now, the immediate headwinds have overshadowed AXT’s strategic investments, leading to a sharp correction in its stock price.