AXT, Inc. heads into its July 30 earnings report with one of the starkest internal contradictions in the semiconductor materials space: short interest at a multi-week high, yet options traders running the most bullish they have been all year.
Short sellers have accelerated hard. Bears now control 25.2% of the free float — up 45% in a single week, the fastest build in the 30-day window tracked here. That is a meaningful step-up from the 19.1% flagged in last week's note, itself described as active rebuilding. The move has been concentrated: the largest daily jump landed on July 9, when positions extended sharply before holding near those levels through the week. At 11.3 million shares short, this is the highest conviction bears have shown in months. The ORTEX short score has ticked up to 55.3, its highest reading in the recent history shown, consistent with rising short pressure.
The borrow market, however, offers no amplifier for that conviction. Availability is wide at 374% — roughly three-and-a-half shares available for every one already borrowed — and cost to borrow is a negligible 0.50%, up 21% on the week but still barely above zero in absolute terms. Bears can add freely at almost no carry cost. There is no mechanical squeeze pressure. The short build looks deliberate and unhurried, not a desperate scramble in a constrained pool.
Options positioning flatly contradicts the short story. The put/call ratio has collapsed to 0.60, more than two standard deviations below its 20-day average of 0.87 — the most call-heavy reading in the past year. Six weeks ago, the ratio was above 1.05, reflecting heavy put demand as the stock was falling. That defensive posture has unwound completely. Options traders appear to be positioning for upside into the July 30 print, even as short sellers rebuild aggressively on the other side.
The Street backdrop supports a cautiously constructive read, though analyst data here carries a lag. Wedbush has been the most active voice, raising its Outperform target twice in rapid succession around the April earnings beat — first from $28 to $80, then to $93. B. Riley holds at Neutral with a $21 target, a significant divergence that reflects genuine disagreement about the company's near-term revenue trajectory. The bull case centres on record InP substrate backlog and expanding capacity for data-centre optical interconnects. The bear case flags rising operating costs, raw material headwinds, and execution risk around export permits and the proposed China STAR Market IPO. Valuation is stretched on most measures — the trailing PE is above 135 and EV/EBITDA near 100 — though both have compressed sharply over the past 30 days as the stock retraced from its June highs above $115. EPS momentum scores are exceptional, ranking in the 86th and 100th percentiles on 30-day and 90-day windows respectively, which explains why Wedbush has stuck with its bullish stance despite the multiple compression.
Insider activity adds a complicating layer. Lead Independent Director Jesse Chen sold heavily through early-to-mid June — 13 separate transactions totalling more than 56,000 shares between June 2 and June 15, at prices ranging from $87 to $115. Director David Chang also sold 8,333 shares on June 15 at around $111. The stock now trades at $57.57, roughly half the price at which those insiders were selling. The 90-day net insider figure is technically positive at $29 million, but that reflects earlier buying activity; the most recent cluster was uniformly directional: out. That selling at the top, noted in last week's article as a $21 million event, has since grown in scale and reinforces the picture of insiders who saw the valuation as full long before the market agreed.
Among correlated peers, TSEM stands out this week, up 20.6% — the strongest move in the group and a reminder that the semiconductor materials space can move sharply on discrete demand signals. SMTC added nearly 12%. AXTI itself managed just a 14% single-day bounce on July 14 but is essentially flat on the week, suggesting the rebound has not yet resolved the broader downtrend from June.
With earnings confirmed for July 30 after market close, the next two weeks will be defined less by whether InP demand is real — the backlog data and Wedbush's conviction suggest it is — and more by whether the company can demonstrate revenue conversion against the capacity and licensing constraints the bears are pricing in.
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