Applied Optoelectronics (NASDAQ:AAOI) Posts Quarterly Earnings Results

Applied Optoelectronics (NASDAQ:AAOI) posted its quarterly earnings results on Thursday. The semiconductor company reported ($0.01) EPS for the quarter, topping analysts’ consensus estimates of ($0.12) by $0.11, FiscalAI reports. The firm had revenue of $134.27 million during the quarter, compared to analyst estimates of $131.56 million. Applied Optoelectronics had a negative return on equity of 6.22% and a negative net margin of 8.39%.The business’s revenue for the quarter was up 33.9% on a year-over-year basis. During the same period last year, the company earned ($0.02) earnings per share. Applied Optoelectronics updated its Q1 2026 guidance to -0.090-0.000 EPS.

Here are the key takeaways from Applied Optoelectronics’ conference call:

• Delivered a record year with $456 million revenue in 2025 (up 83% YoY) and Q4 revenue of $134.3 million, driven by strong gains in both data center and CATV businesses.
• Strong 800G momentum — AOI received a fourth 800G volume order, completed multiple product qualifications, expects firmware interoperability by March, and is ramping production with 800G forecast to dominate revenue beginning in Q2 while demand is projected to exceed capacity through mid-2027.
• Improved profitability trajectory — Q4 non-GAAP gross margin was 31.4% and non-GAAP EPS was a loss of $0.01; management expects non-GAAP profitability in Q2 2026 and >$1 billion revenue plus >$120 million non-GAAP operating profit for 2026, with a long-term gross margin target near 40%.
• Near-term execution risks — firmware delays reduced 800G revenue below expectations in Q4 and current production is capacity-constrained, leaving near-term ramps dependent on timely firmware fixes, capacity additions, supply-chain timing, and tariff outcomes.
• Concentration and investment risks — top 10 customers accounted for ~96% of Q4 revenue (three customers >10%), while AOI invested heavily in capacity (Q4 CapEx $84M; 2025 CapEx $209M) and increased inventory to $183M, raising execution and financial exposure if demand/timing shifts.

Applied Optoelectronics Price Performance

Shares of NASDAQ:AAOI traded up $30.54 during trading on Friday, reaching $84.23. The company had a trading volume of 24,488,392 shares, compared to its average volume of 4,989,014. Applied Optoelectronics has a 12 month low of $9.71 and a 12 month high of $84.31. The company has a fifty day moving average of $42.16 and a two-hundred day moving average of $32.59. The stock has a market capitalization of $5.75 billion, a P/E ratio of -129.58 and a beta of 3.32. The company has a current ratio of 2.31, a quick ratio of 1.63 and a debt-to-equity ratio of 0.23.

Insider Activity

In other Applied Optoelectronics news, CFO Stefan J. Murry sold 11,693 shares of the company’s stock in a transaction that occurred on Wednesday, February 11th. The stock was sold at an average price of $50.25, for a total value of $587,573.25. Following the completion of the sale, the chief financial officer owned 290,050 shares of the company’s stock, valued at $14,575,012.50. This represents a 3.88% decrease in their ownership of the stock. The sale was disclosed in a filing with the Securities & Exchange Commission, which is available through the SEC website. Also, insider David C. Kuo sold 17,467 shares of the stock in a transaction that occurred on Wednesday, February 11th. The shares were sold at an average price of $50.17, for a total transaction of $876,319.39. Following the transaction, the insider owned 111,663 shares in the company, valued at $5,602,132.71. The trade was a 13.53% decrease in their ownership of the stock. The disclosure for this sale is available in the SEC filing. In the last ninety days, insiders have sold 66,520 shares of company stock valued at $3,080,367. Corporate insiders own 4.50% of the company’s stock.

Hedge Funds Weigh In On Applied Optoelectronics

Several institutional investors and hedge funds have recently made changes to their positions in the business. Invesco Ltd. lifted its stake in Applied Optoelectronics by 5,208.9% in the fourth quarter. Invesco Ltd. now owns 3,512,309 shares of the semiconductor company’s stock worth $122,439,000 after purchasing an additional 3,446,150 shares during the last quarter. XTX Topco Ltd grew its position in Applied Optoelectronics by 167.6% during the 4th quarter. XTX Topco Ltd now owns 24,771 shares of the semiconductor company’s stock worth $864,000 after acquiring an additional 15,513 shares during the last quarter. SummitTX Capital L.P. purchased a new position in Applied Optoelectronics in the 4th quarter worth approximately $254,000. Quadrature Capital Ltd bought a new stake in Applied Optoelectronics in the fourth quarter valued at approximately $1,453,000. Finally, Millennium Management LLC purchased a new stake in shares of Applied Optoelectronics during the fourth quarter valued at approximately $358,000. Institutional investors own 61.70% of the company’s stock.

Wall Street Analysts Forecast Growth

Several brokerages have commented on AAOI. Wall Street Zen upgraded Applied Optoelectronics from a “sell” rating to a “hold” rating in a research note on Saturday. Rosenblatt Securities restated a “buy” rating and issued a $50.00 price objective on shares of Applied Optoelectronics in a research report on Thursday, February 19th. Needham & Company LLC boosted their price objective on shares of Applied Optoelectronics from $43.00 to $80.00 and gave the company a “buy” rating in a research note on Friday. B. Riley Financial upgraded shares of Applied Optoelectronics from a “sell” rating to a “neutral” rating and increased their target price for the stock from $15.00 to $54.00 in a research note on Friday. Finally, Weiss Ratings restated a “sell (d-)” rating on shares of Applied Optoelectronics in a research report on Wednesday, January 21st. Three analysts have rated the stock with a Buy rating, three have issued a Hold rating and one has assigned a Sell rating to the stock. According to data from MarketBeat.com, the stock presently has a consensus rating of “Hold” and a consensus price target of $52.80.

Key Stories Impacting Applied Optoelectronics

Here are the key news stories impacting Applied Optoelectronics this week:

• Positive Sentiment: Q4 beat and revenue strength: AAOI reported a $0.01 loss per share vs. consensus -$0.12 and revenue of $134.3M, up ~34% year-over-year — both results topped estimates and underpinned the rally. MarketBeat earnings summary
• Positive Sentiment: Upside revenue guidance: Management raised Q1 2026 revenue guidance to $150M–$165M, above consensus, signaling continued demand — a key driver for investor optimism. GlobeNewswire press release
• Positive Sentiment: Bullish write-up highlighting large growth potential: 247WallStreet published a bullish piece framing AAOI as entering a “10x moment” with aggressive revenue projections that likely boosted speculative buying interest. AAOI’s 10x Moment
• Positive Sentiment: Analyst upgrade / target increase from Needham: Needham raised its price target to $80 and maintained a “buy” rating, lending institutional validation to the recent beat and outlook. Benzinga
• Neutral Sentiment: EPS still a small loss despite beat: The company reported a small GAAP loss but beat the much larger consensus loss estimate — a mixed data point for profitability progress. Zacks
• Neutral Sentiment: Conference call and detailed release available for off-cycle color: Investors should review the earnings call transcript and press release for product, margin and backlog details that will determine sustainability of the beat. Earnings call (Yahoo)
• Negative Sentiment: Some analyst targets remain below current levels: Northland reaffirmed a “market perform” with a $55 target and B. Riley’s $54 target (despite an upgrade to neutral) both imply sizable downside from current prices — a restraint on further upside until fundamentals confirm sustainability. Finviz Benzinga
• Neutral Sentiment: Short-interest data appears inconsistent: Public short-interest reports in the feed show zero shares/NaN changes (likely data errors) — ignore until verified; actual short-covering could amplify moves but current data is unreliable.

About Applied Optoelectronics

Applied Optoelectronics, Inc develops and manufactures high-speed fiber-optic networking products designed to support the growing bandwidth demands of data centers, telecommunications carriers and internet content providers. The company’s core offerings include pluggable optical transceiver modules, transponders and optical components that enable data transmission at rates ranging from 1G to 400G. These products are used to facilitate long-haul, metro and intra-data center connectivity, addressing the need for scalable, low-latency and energy-efficient solutions in modern network infrastructures.

The company’s product portfolio spans small-form factor pluggable modules such as SFP+, QSFP+ and QSFP28 units, as well as more advanced form factors like CFP2 and OSFP for ultra-high-speed applications.