10 Best Semiconductor Penny Stocks To Invest In Right Now

5. AXT, Inc. (NASDAQ:AXTI)

Number of Hedge Fund Holders In Q3 2024: 10

AXT, Inc. (NASDAQ:AXTI) is an upstream semiconductor firm that primarily makes and sells substrates. These products are used to manufacture chips on them, and AXT, Inc. (NASDAQ:AXTI)’s substrates revolve around communications, solar, robotics, and other associated applications. The stock has been on quite a ride this year. It fell by 37% in April after a research report alleged that the firm was facing tight financial conditions. AXT, Inc. (NASDAQ:AXTI)’s shares continued their downward momentum in November, as they fell by another 18% following a third-quarter revenue miss. While the firm raked in $23.6 million in revenue during Q3, analysts had expected it to bring in $25.5 million. Even though AXT, Inc. (NASDAQ:AXTI) is based in California, 99% of the firm’s long-term assets are in China. Additionally, 50.6% of the firm’s H1 2024 revenue came from the East Asian country, which creates a double-edged sword. While AXT, Inc. (NASDAQ:AXTI) can benefit from renewed Chinese focus on its domestic industry, the firm might also be caught in the crosshairs of geopolitical tensions between the US and China.

AXT, Inc. (NASDAQ:AXTI)’s management shared details about the state of its Chinese market during the Q3 2024 earnings call:

“Overall, the market recovery is somewhat lumpy, particularly given the weak economic conditions in China. But new fiscal stimulus in China announced in September could provide a catalyst for a truly market environment. This will benefit demand across a broad based of applications, including power amplifiers, HPT applications for wireless switches, high-speed power industrial labels, and LEDs. We continue to be encouraged by our relatively new traction in HPT applications by bringing the learning from our product that’s advancing in our 8-inch gallium arsenide development to our 6-inch gallium arsenide wafer production.”