AXT shares surged nearly 26% in after-hours trading after the semiconductor substrate manufacturer delivered a major Q2 2026 earnings beat and announced a significant long-term supply agreement. Revenue reached $47.6 million, up 164% year over year and 57% above Wall Street estimates, while adjusted EPS of $0.19 more than doubled the consensus forecast of $0.07. The company also reported a dramatic improvement in profitability, with gross margin expanding to 45.0% from 8.2% a year earlier. Management highlighted record indium phosphide wafer substrate revenue, driven by growing demand for optical connectivity solutions used in AI data centers. Adding to the strong results, AXT signed a capacity reservation agreement with Lumentum extending through 2031. Under the deal, Lumentum will provide two deposits of $43.5 million each, totaling $87 million, to secure priority access to indium phosphide wafer substrates. $AXTI $LITE