AXT is one of the few companies growing Indium phosphide wafers, a critical component for optical lasers, creating a strong moat. However, the company faces significant risks including manufacturing concentration in China requiring export permits, shareholder dilution, insider selling, and continued unprofitability, making it a highly speculative 'lottery ticket' at 66 times sales.
“But at roughly 66 times sales, this is a small speculative lottery ticket position that a lot of people have asked me about.”