AXT: The Fundamental Material/Substrate Player That is the Base for Any InP Laser. It's Also the Base in the $LAZR ETF

Back in May, I wrote about the almost-unknown materials company, at least in Sweden. AXT had 300 owners then, today that has doubled August 2026, still small numbers. AXT was up roughly 5,000% in a year, sitting at what I called a hidden bottleneck in AI infrastructure.

That piece “held up”: the stock kept running to an all-time high above $143 later that month, however it now sitting at 50% of ATH. The business itself has since delivered a genuinely stunning Q2, with record revenue of $47.6 million, up 164% year-over-year, gross margin more than doubling to 45%, and indium phosphide revenue alone hitting a record $30.7 million.

Needham upgraded the stock to Buy. Management now guides for InP revenue to triple by the end of this year and reach $130 million a quarter by the end of 2027.

But there's things that needs clarification and more depth. Not just describing AXT as sitting downstream in the supply chain, supplying substrate to companies like Lumentum to grow their lasers on. This is still correct, but with China/US relations being strained, AXT China dependency needs to be reviewed.

Background

One thing worth clearing up before going further: LAZR doesn't only hold AXT at the substrate layer. The also owns LandMark Optoelectronics, IntelliEPI, IQE, and Soitec, all frequently described as "substrate" or "materials" names in the same breath as AXT. But it's worth being precise here, because most of them aren't actually InP alternatives.

IntelliEPI is primarily a gallium arsenide specialist, not an InP grower. Soitec works in an entirely different substrate technology silicon-on-insulator, commanding the vast majority of global supply which is super important for Silicon Photonics (SiPho). But that is on the Silicon side of the ecosystem not the laser side. Of the four, only LandMark Optoelectronics and IQE actually produce InP alongside AXT (and Sumitomo and JX, more about them later).

So while $LAZR does hold real diversification at the broader "compound semiconductor substrate" layer (see pictures above from SemiAnalysis). Top 3 is making +90% of the substrates.

This information show that th InP bottleneck is a much narrower club than the ETFS substrate-layer holdings might suggest at a glance. I will also explain, why.

Where AXT Actually Makes