AXTQ 2X Short AXT ETF Surges 15% as AXT Retraces From 147% Year-to-Date Rally; Coherent Drops 8%
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AXT (NASDAQ:AXTI) is giving back part of a huge run this year, and a fund built to profit from that retreat is surging. The Tradr 2X Short AXTI Daily ETF (CBOE:AXTQ) is an inverse fund that rises when AXT falls. It aims for twice the opposite of the stock’s daily move and resets every day, so its returns can drift from that multiple over time. The AXTQ fund is trading at $40.31 this afternoon, up 15%.
Shares of AXT are at $40.46, down 7%. AXT stock is still up 147% year to date despite that drop. Over the past 52 weeks, AXT has traded between a low of $8.44 and a high of $143.16, a range that shows how violently the shares have moved.
The pullback in AXT comes during a broad selloff in technology. Meanwhile, the NASDAQ 100 is down 2%, and technology is the weakest sector of the market. Across the sector, tech stocks are struggling as NVIDIA (NASDAQ:NVDA | NVDA Price Prediction) keeps falling.
Profit Taking Hits AXT After a Record Quarter
AXT’s slide fits a pattern of profit taking after an extraordinary run, as AI hardware winners give back gains across the group. Strong fundamentals sit behind that run: on October 29[1], AXT reported record Q3 2026 results.
Revenue at AXT reached $73.41 million[1], up 162.6% year over year and ahead of the $66 million consensus estimate. On the bottom line, the company’s adjusted earnings per share (EPS) of $0.41[1] exceeded the $0.31 consensus. Demand for indium phosphide (InP) substrates used in AI data center optical connections drove the beat, and AXT’s gross margin rose to 56%[1].
CEO Morris Young said on the earnings call, “Demand remains ahead of supply even as we accelerate the pace of our capacity additions.”[2] Young added that AXT had more than quadrupled[1] its indium phosphide revenue opportunity for this year. Wall Street’s average price target on AXT is $91.50.
Risks come with AXT’s growth, too. The company disclosed that export permits for indium phosphide remain uncertain, that its manufacturing is concentrated in China, and that Chinese private equity investors in its Tongmei subsidiary could request redemptions[1].
Coherent and Applied Optoelectronics Slide Alongside AXT
Coherent (NYSE:COHR) stock is at $214.24, down 8%. The fall outpaces AXT’s, a sign that selling pressure extends beyond the biggest winners. Year to date, Coherent stock is up 16%, a far smaller run than AXT’s.
Applied Optoelectronics (NASDAQ:AAOI) stock is at $49.08, down 7%. The slide leaves Applied Optoelectronics nearly in line with AXT. The AI optical connectivity group, where these three stocks are, is trading lower as a block.
How AXT’s Business Differs From Coherent and Applied Optoelectronics
AXT stands at the top of the optical supply chain. Through its Tongmei subsidiary, the company grows indium phosphide, gallium arsenide and germanium wafers at sites in China. Chipmakers turn those substrates into the lasers and detectors inside optical transceivers.
Coherent is vertically integrated, running from crystal growth and its own indium phosphide capacity through lasers, optics and finished transceivers. Applied Optoelectronics builds finished high-speed transceivers for hyperscale data centers and also sells cable television broadband equipment. That structure gives both companies broader product exposure, while AXT’s prospects ride heavily on one scarce material.
The AXTQ fund is a pure trading vehicle tied to AXT. Every move in the fund comes from AXT’s daily price change, reversed and amplified, so its value depends entirely on the direction of AXT stock.
What Comes Next for AXT and Its Inverse ETF
AXT’s next test is whether the stock finds support after this pullback. Bulls point to a record quarter and management’s view that InP demand still exceeds supply. On the other side, the bears counter that the stock has already run hard this year and that export permits and China exposure remain open risks.
Leveraged inverse funds like the Tradr fund can move sharply against shareholders if AXT rebounds, and daily resetting can erode returns over longer holding periods. Those mechanics make the AXTQ fund’s performance highly sensitive to how long it is held.
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David Moadel is financial writer specializing in stocks, ETFs, options, precious metals, and Bitcoin. David has written well over 1,000 articles for leading online publications, helping investors understand markets, income strategies, and risk. His work has appeared in 24/7 Wall St., The Motley Fool, InvestorPlace, U.S. News & World Report, TipRanks, ValueWalk, Benzinga, Market Realist, MarketScreener, TalkMarkets, Finmasters, and others. With a master’s degree in education, David has taught at the elementary, high school, and college levels. That teaching background shapes his writing style: clear, educational, and practical. David has also built a loyal social-media audience by providing trustworthy financial content on YouTube, X/Twitter, and StockTwits.
