If you thought a 30% stock rally was exciting, try watching it through a leveraged ETF. That's what happened Friday for traders holding any of the three single-stock ETFs tied to AXT Inc. (AXTI), a semiconductor materials company that just delivered an earnings report straight out of the AI playbook.

The Leverage Shares 2X Long AXTI Daily ETF (AXTL) gained 49%, making it one of the day's biggest ETF winners. Not far behind was the Tradr 2X Long AXTI Daily ETF (AXTX), up more than 48%, and the T-REX 2X Long AXTI Daily Target ETF (AXTU), which climbed over 47%. These funds are designed to deliver 200% of AXT's daily return, so when the stock jumps 30% after a blowout quarter, the ETFs can go vertical.

Another Win for Single-Stock ETFs

Friday's surge is the latest example of how single-stock leveraged ETFs can turn an already big move into something even bigger. These products reset daily, meaning they're built for short-term traders looking to make a high-conviction bet around a specific catalyst, like an earnings report, a product launch, or a major corporate announcement. They're not meant for buy-and-hold investors, and the math can get ugly if you hold them too long. But on a day like Friday, they can be a rocket ship.

AI Demand Drove the Catalyst

While the ETF story is about leverage, the real catalyst was AXT's earnings. The company reported adjusted earnings of 19 cents per share, crushing the 7-cent consensus estimate. Revenue jumped 165% year over year to $47.6 million, also well ahead of expectations.

But the headline numbers only tell part of the story. 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.