Shares in IQE PLC (AIM:IQE) jumped 13% to 40.75p after the compound semiconductor maker raised its full-year revenue guidance on the back of booming demand for artificial intelligence infrastructure.
The Cardiff-based group, a leading global supplier of specialist wafer products used in chips, said first half trading had beaten management expectations.
It now expects revenue growth in excess of 30% year-on-year for 2026, up from previous guidance of above 20%.
The upgrade should deliver adjusted earnings before interest, tax, depreciation and amortisation in the low teens of millions of pounds.
Growth was driven by accelerating demand for IQE's indium phosphide products, a material critical to the optical components that move data around AI systems and data centres.
Revenue for the six months to 30 June is expected to reach at least £64 million, up about 41% on the same period last year.
The performance was also supported by strength in aerospace and defence, alongside robust demand for 3D sensing and wireless products.
The group remained free of bank debt, with a cash position of £41.6 million at the end of June.
Peel Hunt, which rates the shares a buy with a 60p target price, lifted its 2026 revenue forecast by 7% to £128 million and its adjusted EBITDA forecast by 30% to £13 million.
The broker highlighted a 38% drop-through margin as evidence of IQE's operational leverage, and pointed to momentum from three recent long-term agreements, with MACOM, Tower Semiconductor and a further data centre customer.
Peel Hunt said it saw a multi-year growth platform not yet reflected in its forecasts, with significant scope for further upside.
Panmure Liberum, also a buyer with a 50p target, expects consensus to settle around £127 million to £128 million of revenue and £13 million to £14 million of EBITDA.
The balance sheet was bolstered earlier this year by an £81 million fundraise, which included investment from US strategic partner MACOM, moving the group from a £23.5 million net debt position a year ago.
Chief executive Jutta Meier said she was very pleased that first half trading had exceeded expectations.
She said IQE's long-established leadership in indium phosphide left it critically embedded in the supply chains enabling major industry trends.
Meier added that she remained extremely excited about the opportunities ahead for the transformed business.
