Inflation is currently at a 40-year high, which has sent the U.S. Federal Reserve on one of its most aggressive campaigns to increase interest rates in its history. It has driven consumers to tighten their belts while also hitting the bottom line of corporate America.

For those reasons, major market indexes like the S&P 500 and the Nasdaq 100 have swung in and out of bear-market territory all year. Many individual stocks in the technology sector have been crushed far worse than the broader markets, with losses of 50% or more becoming common in 2022. 

But not Axcelis Technologies (ACLS -0.84%). That stock is flat for the year after logging a whopping 54% gain in the past month alone. But it gets better for the semiconductor-service company because it reported its financial results for the second quarter of 2022 on Aug. 4 and saw a considerable increase in both its sales and profit. 

A critical part of a critical industry

The end users of products and services, whether individuals or businesses, demand an ever-growing amount of digital capabilities to make life more convenient. It has triggered a boom in the semiconductor industry, which manufactures the advanced computer chips that bring electronics to life. 

The sector is on its way to a $1.5 trillion annual value by the end of the current decade, and the opportunities for investors extend beyond just the main chip producers themselves. Axcelis Technologies is one of many semiconductor-service companies, making best-in-class ion implantation equipment critical to the fabrication process.

The company sells its equipment to the largest chipmakers in the world, so it has a hand in producing a diverse range of semiconductor hardware for different applications, from processors to storage chips. In fact, in almost every month of 2022 so far, Axcelis has issued press releases to the market announcing high-profile shipments to new and existing customers around the globe.

That's unlikely to end anytime soon because, in the second quarter, Axcelis revealed it has the highest backlog of orders in its history, amounting to more than $869 million.

Axcelis' sales and profits are soaring

Despite difficult economic conditions, the semiconductor industry is clearly investing money to expand production capacity to keep up with rising demand, thus requiring more of Axcelis' products and services.

In the second quarter of 2022, Axcelis generated $221.1 million in revenue, equating to an increase of 50% compared to the same period last year. But thanks to an uptick in its gross profit margin combined with disciplined cost management, the company more than doubled its net income to $44.1 million. 

It translated into a 140% year-over-year increase in Axcelis' second-quarter earnings per share, coming in at $1.32.

The stellar performance prompted the company to boost its full-year 2022 sales guidance to $875 million from $850 million previously. Axcelis originally wasn't expecting to exceed $850 million in annual revenue until 2023, so it's an entire year ahead of schedule. 

Axcelis stock is a great value

Because of its success, Axcelis has been returning a growing amount of money to shareholders. In February 2022, it announced a $100 million stock buyback program, which is designed to shrink the number of shares in circulation, in turn making each remaining share of the company more valuable. It follows $75 million previously returned to investors since 2019.

Over the last four quarters, Axcelis has generated a total of $4.40 in earnings per share, giving its stock a price-to-earnings multiple of 17.9. Despite the company's strong performance, it still trades at a 16.5% discount to its peers in the semiconductor industry, as represented by the iShares Semiconductor ETF, which trades at a multiple of 20.6 right now. 

That implies there's still some upside left, even after the strong run in Axcelis stock over the past month. But it's the long-term investors should be focused on, and semiconductor demand is likely to only move in one direction: higher.