Leveraged ETFs tracking AXT Inc. (NASDAQ:AXTI) dominated Friday’s list of top-performing ETFs after the semiconductor materials company reported stronger-than-expected quarterly results and raised its outlook on booming AI infrastructure demand.
The Leverage Shares 2X Long AXTI Daily ETF (BATS:AXTL) gained 49%, making it one of the day’s biggest ETF winners. It was closely followed by the Tradr 2X Long AXTI Daily ETF (BATS:AXTX), which climbed more than 48%, and the T-REX 2X Long AXTI Daily Target ETF (BATS:AXTU), which advanced over 47%. The gains mirrored a sharp rally in AXT shares after the company posted a blowout earnings report that underscored growing demand for optical semiconductor materials used in AI data centers.
Another Win for Single-Stock ETFs
Friday’s surge is the latest example of how single-stock leveraged ETFs can amplify post-earnings moves. These funds seek to deliver 200% of AXT’s daily return, making them particularly sensitive to large price swings following earnings announcements.
The products have become increasingly popular among short-term traders looking to express high-conviction views around catalysts such as earnings, product launches, and major corporate announcements. However, because they reset daily, they are generally designed for tactical trading rather than long-term investing.
AI Demand Drove the Catalyst
While the ETF story is about leveraged exposure, the catalyst came from AXT’s earnings.
The semiconductor wafer manufacturer reported adjusted earnings of 19 cents per share, easily beating the 7-cent consensus estimate, while revenue jumped 165% year over year to $47.6 million, well ahead of expectations.
More importantly for investors, management pointed to record indium phosphide (InP) revenue and a backlog exceeding $100 million, as demand for optical connectivity components used in AI data centers continues to outstrip supply. The company also forecast third-quarter revenue of about $66 million, far above Wall Street’s estimate of $38.8 million, and expects to double InP production capacity during 2026.
Bigger Picture
The outsized gains also reflect investors’ continued enthusiasm for companies supplying the AI infrastructure buildout beyond GPU manufacturers. As AI clusters become larger and faster, demand is increasing for optical networking components that rely on indium phosphide substrates, creating another pocket of momentum within the semiconductor ecosystem.
For ETF investors, Friday’s rally illustrates how thematic AI catalysts are increasingly spilling over into the growing universe of leveraged single-stock ETFs, where earnings surprises can quickly translate into gains of 40% or more in a single session.
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