The optics complex is ripping higher in Monday’s session. AXT (NASDAQ:AXTI) is up 13.71% intraday, with Coherent (NYSE:COHR | COHR Price Prediction) climbing 8.12%, Lumentum (NASDAQ:LITE) adding 6.79%. AXTI is now trading at $92.83, extending a run that has the stock up 399.33% year to date.
Indium Phosphide Price Hikes Detonate the Optics Trade
The proximate catalyst is a United Daily News report published Monday out of Taipei detailing severe undersupply in indium phosphide (InP) substrates and epitaxial wafers. Q4 price increases are brewing at more than 10%, which the report calls the largest increase on record. Earlier expectations had been for 3% to 5%. InP substrate prices began rising in Q4 of last year and have already been raised three times, now heading for a fourth consecutive increase. Epitaxial wafers have been raised twice and are heading for a third. A supplier is quoted saying even with money, buyers may not be able to secure supply.
AXT is the natural US-listed read-through. It is a leading producer of InP substrates, and rising InP pricing flows directly to its economics. That leverage was already visible last quarter: Q2 2026 revenue hit $47.6 million, up 164% from Q2 2025, with indium phosphide revenue at $30.7 million, the highest in company history, and non-GAAP gross margin expanding to 45.0%. CEO Morris Young told analysts “customer demand continues to outpace supply no matter how fast we add capacity.” AXT is targeting roughly $60 million per quarter in InP capacity exiting 2026 and ~$130 million per quarter exiting 2027.
Named Taiwanese beneficiaries in the UDN piece include Visual Photonics Epitaxy, LandMark Optoelectronics and IET-KY. None are US-listed, so treat those as supply-chain color rather than investable tickers in most brokerage accounts.
Coherent and Lumentum Ride the Same Wave, With a VR200 Kicker
Coherent and Lumentum are the demand side of the InP story. Both are building internal InP capacity and buying substrate from AXT. Coherent’s CEO Jim Anderson said the company is on track to double internal InP output capacity by end of the current quarter, one quarter ahead of original plan, with 80% year-over-year growth in InP laser production in the June quarter. Coherent’s Q4 revenue printed at $2.05 billion, and management guided fiscal Q1 to $2.2 billion to $2.4 billion.
Lumentum flagged the AXT relationship directly. CEO Michael Hurlston told investors “we went out and we found additional substrate help from AXTI. They’ve been a great partner.” Lumentum posted Q4 revenue of $1.01 billion, up 109% year-over-year, with non-GAAP gross margin at 50.4%, and guided Q1 revenue to roughly $1.25 billion.
Adding to Monday’s tone, a Mizuho note published Sunday August 16, 2026 says VR200 NVL72 ramps look strong, a tailwind for Lumentum and Coherent, and also for Wolfspeed on the power-supply side. Wolfspeed’s Q3 update highlighted approximately 30% sequential growth in AI data center revenue from Q2 to Q3, though the SiC story is peripheral to InP pricing.
For readers who want the theme without single-stock risk, the Roundhill Photonics & Optics ETF (CBOE:LYTE), a brand-new fund that began trading in early August 2026, is also trading higher on Monday as the optics basket lifts. Its stated objective is capital appreciation via photonics and optics exposure. The InP squeeze is really an AI data-center story in disguise, and we rounded up seven suppliers powering that buildout, from optics to power to cooling, in a free report you can grab here.
Positioning Backdrop From Friday’s 13F Filings
Institutional filings that hit the tape on August 14 (positions as of 2026-06-30) show the smart-money footprint heading into this move. In AXT, D. E. Shaw added, to 2,250,085 shares valued $162,186,127, Millennium Management added, to 854,322 shares valued $61,579,530, and Balyasny opened a new position of 114,386 shares. In Coherent, NVIDIA disclosed 7,788,161 shares valued $3,072,195,870, equal to 4.84% of its 13F portfolio, and SRS Investment Management opened a new position of 929,963 shares valued $366,842,505. In Lumentum, Balyasny added, to 154,180 shares valued $132,295,691. These are point-in-time disclosures as of June 30, and today’s proven catalyst is the UDN InP pricing report.
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