IQE, the Cardiff-based maker of compound semiconductor wafers, has repeatedly raised its 2026 revenue outlook on the back of growing AI data-centre demand for Indium Phosphide-based photonics, with expectations of more than 30% growth in 2026 after earlier guidance of over 20%. Half-year results showed at least £64 million in revenue and reinforced optimism across its optical and wireless segments, underpinned by strong orders for AI-ready components used in data centers and aerospace/defense applications. The company’s performance remains lopsided, with photonics rebound offsetting softness in wireless chips for smartphones, while margins have been under pressure and losses persist, though cash generation improved as capital spending slowed. IQE’s narrative is built on its critical position in AI infrastructure, as faster deployments of AI clusters and the need for high-speed data transmission boost demand for Indium Phosphide substrates. Management continues to guide for sustained momentum into the second half of the year, with a bank-debt-free balance sheet and substantial cash reserves cited as enablers of its growth trajectory. The market’s interpretation remains mixed due to structural profitability concerns, yet IQE’s role in AI/data-center supply chains keeps the stock in focus for investors seeking exposure to advanced semiconductor materials.