1 Small-Cap Stock I'd Buy Before GLBE in 2026

Global-E Online (NASDAQ: GLBE) -- a company that specializes in helping online retailers deal with the complexities of selling their wares internationally -- has lost roughly 30% of its value over the past year, despite solid revenue growth and profit margin expansion. The main factor behind that slump was the company's lofty P/E ratio, and while that metric is still high, it should become more reasonable if profits pick up as expected. While Global-E Online has a 946 P/E ratio, its forward P/E is a far more attractive 39.4.

Still, Global-E Online may not make sense for every growth investor's portfolio. Plenty of other stocks have outshone it over the past few years and have the capacity to deliver higher long-term returns from here. In my view, AXT (NASDAQ: AXTI) might be one of them as more investors come to recognize its connection to the artificial intelligence (AI) space.

Indium phosphide is a key material for data center hardware

Image source: Getty Images.

AI chipmakers were the millionaire-maker stocks of a few years ago. Many investors recognize that the supply-and-demand imbalance for high-end parallel processors is one bottleneck limiting the speed at which new AI-capable data centers can be built, but there are others, too.

For investors, one smart way to spot the best potential growth stocks from here may be to go hunting for some of those other underappreciated AI infrastructure bottlenecks. For instance, indium phosphide is a semiconductor material that is used in a host of critical AI infrastructure hardware.

In AXT's Q3 earnings call, the semiconductor specialist's CEO claimed that the company holds 40% of the indium phosphide supply. The company has also raised more funds to bolster its market share in the rapidly growing niche.

Demand has been surging for this semiconductor material. AXT told investors in its Q3 press release that its indium phosphide revenue had grown by more than 250% sequentially. There is a good chance that AXT will continue to post superb growth as the AI infrastructure buildout continues and accelerates.

AXT is still a small company

Most people haven't heard of AXT. It is a small-cap company that just recently crossed the $1 billion threshold after surging by more than 700% over the past year. It is a volatile stock that can produce sharp gains and losses in a single trading day, but if momentum builds around it, its price should continue to rise.

While Global-E Online recently became profitable and is expanding its margins, AXT is still working on its path to profitability while narrowing net losses.

Global-E Online also faces stiff competition in the e-commerce industry, where Amazon and Walmart are among the heavyweights. AXT also faces competition, but it is a clear leader in its part of the materials science industry. And while it's still relatively small, it has the potential to expand significantly thanks to its key position as an AI bottleneck preventer. Global-E Online isn't nearly that essential in its space.

Marc Guberti has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Global-E Online, and Walmart. The Motley Fool has a disclosure policy.