The Two Histories of Your AXT Stock

A record backlog suggests a bright future, but the stock’s past reveals a pattern of deep, prolonged drawdowns in a market storm.

AXT (AXTI) stock fell 16.0% on June 16th, 2026, a sharp move for a company at the center of a compelling story. As a key manufacturer of compound semiconductor substrates, its Indium Phosphide material is critical for the data center and AI infrastructure build-out. The market is weighing a record backlog of orders, which, on the latest call, management said “has now reached a new high of over $100 million,” against a significant uncertainty: the unpredictable timing of Chinese export permits needed to fulfill that demand. This tension between a booming business and external constraints makes the downside question urgent.

That single-day drop is one thing. A true market shock is another. The real question for a shareholder is how this stock behaves when the entire market falls and whether you have the fortitude to ride out the storm.

How Far AXT Falls When Markets Drop

When markets get turbulent, AXT stock has historically fallen further and faster than the broader index. Across the 15 major shocks it has traded through, the stock’s average peak-to-trough drawdown was 35%, more than double the 16% average for the S&P 500. Its single deepest drawdown was a substantial 89% during the 2008-2009 Global Financial Crisis.

The stock has been hit hardest during “Credit & Liquidity Crises.” Far from being an abstraction, that category includes real, memorable events like the mid-year 2007 credit crunch, the 2008 crisis, and the 2023 SVB regional banking crisis. This history provides a clear warning about the stock’s amplified downside in certain environments.

When AXT Drops, How Long Until It Heals?

Surviving the fall is only half the battle; you also have to endure the climb back. For the shocks it has fully recovered from, AXT has taken a median of about 14 months to return to its pre-shock high. But patience can be severely tested. The slowest recovery, following the 2011 government funding crisis & a period of regional financial instability, took about 74 months to fully heal.

While some past recoveries have been swift, that history is not a guarantee. The duration of a potential recovery is as real a risk as the depth of the drop itself.

Every Major Shock AXT Has Traded Through

Peak-to-trough drawdown in each shock, and how long the stock took to reclaim its pre-shock high. Stock vs. the S&P 500, long-duration bonds, and its sector.

[1] Summer 2007 Credit Crunch: Subprime hedge fund failures froze interbank lending, prompting an emergency Fed rate cut.
[2] 2008-2009 Global Financial Crisis: Lehman’s collapse froze global credit, crashing every asset class and spiking unemployment.
[3] 2010 Eurozone Sovereign Debt Crisis / Flash Crash: Greece’s deficit revelation collapsed European banks and triggered the May Flash Crash.
[4] 2011 US Debt Ceiling Crisis & European Contagion: US credit downgrade and European sovereign stress triggered a broad risk-off selloff.
[5] 2013 Taper Tantrum: Bernanke’s taper hint spiked Treasury yields, triggering emerging market capital flight.
[6] 2014-2016 Oil Price Collapse: OPEC refused to cut output, crashing crude from $100 to $26.
[7] 2015-2016 China Devaluation / Global Growth Scare: Yuan devaluation sparked global recession fears, crushing cyclicals and emerging markets.
[8] 2016-2017 Trump Reflation Bond Selloff: Trump’s election spurred fiscal stimulus hopes, rotating capital from bonds into cyclicals.
[9] Q4 2018 Fed Policy Error / Growth Scare: Powell’s hawkish comments and trade war fears triggered the worst December since 1931.
[10] 2020 COVID-19 Crash: Pandemic lockdowns caused history’s fastest bear market before massive stimulus drove recovery.
[11] 2022 Inflation Shock & Fed Tightening: 9.1% CPI forced aggressive rate hikes, crushing both stocks and bonds simultaneously.
[12] 2023 SVB Regional Banking Crisis: SVB’s rate-driven bond losses triggered a social-media bank run, seized by FDIC.
[13] Summer-Fall 2023 Five Percent Yield Shock: Strong economic data pushed 10-year yields to 5%, compressing yield-sensitive sector valuations.
[14] 2024 Yen Carry Trade Unwind: BOJ rate hike unwound yen carry trades, briefly crashing tech stocks globally.
[15] 2025 US Tariff Shock: 145% China tariffs crashed equities and the dollar on supply chain disruption fears.

Has AXT Changed Since Those Crashes?

To be fair, AXT is not the same company it was during some of its deepest historical drawdowns. Today, it is riding a powerful demand wave from AI, with management planning to double its Indium Phosphide capacity this year and again in 2027 to meet demand. The company is supporting “nearly all leading customers in the optical space” and has begun raising prices.

However, new risks have emerged that align with its volatile history. Management stated on its latest call that the “most significant single factor” for growth is the success and timing of obtaining Chinese export permits, a process they admit is “not predictable nor in our control.” With all capacity expansion centered in its Chinese subsidiary, Tongmei, this geopolitical dependency creates a concentrated risk profile that could easily amplify downside in a broader market selloff.

What This Means For Your AXT Position

It is crucial to translate this risk into portfolio terms. That deepest 89% drawdown on a position sized at 10% of a portfolio would have cut about 9% from the whole portfolio. At a 20% position weight, the impact would have been about 18%. You cannot control the market or geopolitical events, but you can control your exposure.

The sensible response is not to predict the next crisis but to prepare for the possibility through disciplined position sizing and genuine diversification. The status of those export permits is the key variable to watch.

That discipline is exactly what the Trefis High Quality (HQ) Portfolio is built to deliver: it pairs the upside of strong businesses with the stability of a 30-stock portfolio, sized and rebalanced with discipline, and has a track record of outpacing a benchmark that combines all major indices – the S&P 500, S&P Mid-cap, and Russell 2000. Pairing a concentrated holding with an approach like this is how you keep compounding without a single drawdown derailing the plan.