Seven American companies that supply the least visible layers of artificial-intelligence hardware reported results within four days of each other in early August, and the prints pulled them in opposite directions. They make compound-semiconductor wafers, industrial and military lasers, photomasks — the quartz stencils every chip fab uses to print circuits — and the power switches and passive components that condition electricity inside data-centre racks and cars.

Grouped together they look calm; individually they are not. Over the three months to 7 August six of the seven fell, an average of roughly 21%, and all seven remain between 34% and 55% below their highs of this year. Then in the seven sessions around earnings they spread across a 145-point range, from AXT up sharply to nLIGHT down. Any single average across these names describes none of them.

Substrate scarcity is real; the price already assumes it

AXT, a Fremont, California maker of indium-phosphide, gallium-arsenide and germanium wafers on which the lasers inside optical transceivers are grown, reported record second-quarter revenue of $47.6m, up 164% year on year, with indium-phosphide revenue of $30.7m and non-GAAP gross margin of 45.0% against 8.2% a year earlier. Backlog exceeds $100m and is growing faster than shipments; management guided the current quarter to about $66m. Three customers have prepaid for capacity, including a Lumentum agreement signed 29 July reserving minimum annual wafer volumes through 2031 against two $43.5m deposits. An April share sale left $749m of cash against $123m in March.

The business CONFIRMS the move. The valuation does not follow: 20.6x forward sales and 103x forward earnings, against consensus that already has revenue quintupling to $677m by 2028. That is a STRETCHED multiple — the two-year ramp is in the price.

The clearest gap between order book and tape

Vishay Intertechnology, a Pennsylvania maker of power transistors, diodes, resistors and capacitors for industrial, automotive and telecom customers, is the group's sharpest divergence. Second-quarter bookings ran at 1.32 times shipments, backlog rose 18% sequentially to $1.9bn — 6.1 months of shipments — and the company guided the current quarter to a 21.4% revenue increase with 24% gross margin, hitting its own target a quarter early. Distributor inventories fell to 18 weeks from 20 while sell-through grew 20.5%, which points to consumption rather than stockpiling. Yet the stock trades 29% below the $50 at which it sold 17.25m shares on 1 July for $830m net, at 1.35x forward sales and 6.5x forward gross profit — the cheapest in the group. The 42.9x forward price-to-earnings ratio reflects trough margins, not normal ones; the company earned a 12.3% net margin in 2022. Business CONFIRMS, tape CONTRADICTS. The offset: $400–440m of capital spending this year, half on a German 12-inch fab, means negative free cash flow in 2026.

Lasers: one recovering, one tripped by export rules

IPG Photonics, the Massachusetts fiber-laser maker used for cutting and welding, has now posted three straight quarters of double-digit growth after a two-year slump. Second-quarter revenue rose 11% to $278.6m with adjusted earnings of $0.58 a share against $0.35 expected, gross margin up 310 basis points to 40.4%. At 1.80x book and 8.9x forward gross profit against a 47.7% peak-cycle gross margin, the recovery is not priced; the 77x forward earnings multiple is an artefact of depressed margins. INCONCLUSIVE, leaning constructive.

nLIGHT, which makes fiber and directed-energy lasers and won a Department of War contract with a $627m ceiling, grew revenue 33.8% to $82.6m with record defence sales of $57.3m — then fell about a quarter in one session after warning that China-linked supply disruption would hit the current quarter. Roughly $17m of product revenue slipped out of the third quarter; guidance implies flat year-on-year sales and gross margin down to 24–30%. Business CONTRADICTS the prior uptrend, at least for two quarters.

Silicon carbide, photomasks and a pre-revenue option

Wolfspeed, which emerged from a prepackaged bankruptcy in September 2025 having cut debt from about $6.7bn to $2bn, reported revenue down 19% with a negative 26.6% gross margin, and consensus expects fiscal 2027 revenue to fall another 14.8%. It rose 19% in a session on a partnership with LITEON qualifying its silicon carbide for 800-volt data-centre power systems — a qualification, not an order. At 2.65x forward sales and 1.68x book with negative free cash flow, business CONTRADICTS.

Photronics, the Connecticut photomask supplier, saw revenue flat and gross margin compress 560 basis points; its shares fell 36% in a single May session on a miss and a cut outlook. At 4.4x trailing enterprise value to EBITDA and a 5.0% free-cash-flow yield it is the cheapest here, but its 17.6x forward earnings multiple sits above a 12.0x trailing one — consensus expects profits to fall. A justified de-rating. POET Technologies, a Toronto designer of optical interposer chips with 80 employees, booked $503,389 of revenue last quarter against a $17.9m operating loss; at 130x forward sales no fundamental verdict is possible.

The thread, and the tape

One policy binds them. China has licensed indium exports since February 2025 and added 14 European entities to its control list on 24 July, several working on gallium-arsenide and indium-phosphide epitaxy. The same regime is AXT's scarcity engine and nLIGHT's $17m deferral.

A note on the charts below: the moving-average trend labels for these names flipped four times in the fortnight to 7 August, and each was followed by the opposite move — nLIGHT marked into an uptrend the day it fell a quarter, IPG marked down the day it rose on its beat. They lag earnings and should not be read as forecasts here.

The setup

Where it stands — Order books at Vishay and IPG are improving while their shares fall; AXT's numbers confirm the boom but its multiple already assumes it.

Would confirm — Vishay third-quarter revenue landing in the guided $945–975m range with gross margin at or above 24%.

Would invalidate — Vishay book-to-bill falling below 1.0, or backlog declining from $1.9bn, in the next quarterly report.

Watch next — AXT's third quarter against its ~$66m guide, and nLIGHT's, which must show the deferred $17m returning.

Valuation — Vishay 1.35x forward sales and 6.5x forward gross profit, the group's lowest; AXT 20.6x forward sales, 103x forward earnings.