10 Best Penny Stocks To Buy According to the Media

7. AXT, Inc. (NASDAQ:AXTI)

Number of Hedge Fund Holders: 19

AXT, Inc. (NASDAQ:AXTI) is a leading technology company that specializes in producing backend materials used in manufacturing semiconductor devices. The company designs and creates substrate materials for many high-demand electronic components including indium phosphide, gallium arsenide, and germanium substrates. These substrates are used in chip making which are then used to print circuits in the final products. The substrates manufactured by AXT, Inc. are used for improving internet speed, increasing connectivity in data centers, and enabling 5G communications, among many other use cases. In simpler terms, the company manufactures raw materials for modern-day technology and gadgets.

In Q1 2024, AXT, Inc.’s (NASDAQ:AXTI) grew by 17% year over year on the back of strong performance across the board. The Indium phosphide revenue increased to $8.1 million during the quarter driven by a 50% increase in sales from AI and data center-related demand. The company has also been able to improve its gross margins from 26.3% in the first quarter of last year to 27.3% during the current year. Management sees higher production volumes and benefits from its recycling program driving margin improvement and expects to get back to the mid-30% range.

The ability of AXT, Inc. to generate revenue from its global operations, which comprises 79% from Asia Pacific, 16% from Europe, and 5% from North America gives the company a competitive edge over its competitors. The stock was held by 19 hedge funds during the first quarter of 2024, up from 13 hedge funds in the previous quarter, with total stakes worth $24.513 million.

Should you invest in the AXTI?

AXT, Inc. (NASDAQ:AXTI) plays an integral role in the AI and semiconductors markets, both of which are forecasted to grow meaningfully in the future. As long as management remains focused on operational efficiencies and a return to profitability, the company will thrive with the growth of its end markets. Wall Street is also bullish on AXTI. Five analysts hold a Strong Buy rating on the stock and their 1-year median price target of $5.50 implies an upside of 64.18% from current levels.