Shares of AXT Inc. plunged 7.7% to $66.53 on July 1, extending a brutal multi-week selloff that has now erased more than half the gains from the stock's meteoric run. AXTI hit an all-time high of $143.16 on May 26 , meaning the stock has now cratered roughly 54% from its peak — a stunning reversal for a name that was the poster child of the AI-semiconductor materials trade. The trigger: a drumbeat of insider sales that has rattled confidence in a stock already stretched far beyond its fundamentals.
Insiders Cashed Out Millions While the Stock Was Surging
Director Jesse Chen sold 22,000 shares for about $2.04 million on June 11 and another 6,172 shares for roughly $711,000 on June 15 . Director David Chang sold 8,333 shares on June 15 — part of a pattern in which he has sold 243,333 shares over the past year without buying any . CEO Morris Young and the Young Family Trust sold a combined 159,536 shares in March alone for nearly $6.9 million . In total, insiders have sold roughly $71 million more than they have bought over the past 12 months . When the people running the company are collectively net sellers at this scale, it sends a clear signal that they believe the stock price is getting ahead of itself.
The AI Story Is Real, but the Financials Haven't Caught Up
AXT's indium phosphide wafers — critical for AI data-center optics — drove $13.6 million of Q1 2026 revenue, helping total sales reach $26.9 million . Management guided Q2 earnings per share to $0.06–$0.08, backed by a backlog above $100 million . Yet operating margins remain around negative 13%, and the company burned $11.7 million in operating cash flow last quarter . A $4.7 billion market cap on roughly $107 million in annualized revenue demands near-perfect execution.
Wall Street Raised Targets Into the Rally — Now Gravity Is Testing Them
Northland Capital lifted its price target to $125 from $90 , and Wedbush hiked to $93 . At $66.53, AXTI now trades below every major analyst target — but also below the $632.5 million stock offering priced near $64 in late 2025 , threatening to trap new shareholders underwater.
The Bigger Question: Is This a Healthy Reset or the End of the Hype Cycle?
AXT locked in a $25.4 million long-term indium phosphide wafer contract through its Tongmei subsidiary , providing real revenue visibility. Earnings on July 30 will be the next hard test. If Q2 results confirm the profitability turn, the selloff may prove to be a buying opportunity. If not, the insider selling will look less like routine diversification and more like a warning.