Applied Optoelectronics (NASDAQ:AAOI) Issues Earnings Results

Applied Optoelectronics (NASDAQ:AAOI) posted its quarterly earnings data on Thursday. The semiconductor company reported $0.06 EPS for the quarter, beating the consensus estimate of $0.02 by $0.04, FiscalAI reports. Applied Optoelectronics had a negative net margin of 9.57% and a negative return on equity of 2.52%. The firm had revenue of $191.92 million during the quarter, compared to analyst estimates of $190.48 million. During the same quarter last year, the business posted ($0.16) EPS. The company’s revenue for the quarter was up 86.3% on a year-over-year basis. Applied Optoelectronics updated its Q3 2026 guidance to 0.110-0.260 EPS.

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

• Record revenue and return to profitability: Q2 revenue reached $191.9 million, up 86% year over year, marking the fifth consecutive quarterly revenue record. Non-GAAP net income was $5.5 million, or $0.06 per diluted share, ahead of guidance.
• AI-related demand remains exceptionally strong: 800G revenue more than doubled sequentially to $12.8 million, while 400G revenue rose 27.4% sequentially to $48.4 million. Management said forecast demand for 800G and 1.6T products exceeds production capacity through mid-2027.
• Major capacity expansion and product ramps are underway: AOI expects 800G and 1.6T production capacity to rise from nearly 200,000 units per month currently to more than 650,000 by year-end 2026 and over 930,000 by year-end 2027. Initial 1.6T shipments are expected later this quarter, with a larger ramp in 2027.
• CATV business delivered broad-based growth: Record CATV revenue of $80.6 million increased 43.8% year over year, and management guided to $100 million-$110 million in Q3 revenue. Mediacom also selected AOI as its primary vendor for DOCSIS 4.0 upgrades.
• Execution and funding risks remain significant: Q3 100G revenue is expected to decline by $20 million-$25 million because of a customer’s switch and memory shortages, while DSP/TIA and other material constraints could limit the 1.6T ramp. AOI also reported $565.5 million of Q2 capital investments, expects higher second-half CapEx, and plans to use additional equity and debt financing.

Applied Optoelectronics Trading Up 9.2%

NASDAQ:AAOI opened at $135.63 on Friday. The company has a market cap of $10.88 billion, a P/E ratio of -173.88 and a beta of 3.76. The stock’s fifty day moving average price is $137.34 and its two-hundred day moving average price is $118.14. Applied Optoelectronics has a 1 year low of $18.50 and a 1 year high of $233.67. The company has a debt-to-equity ratio of 0.18, a current ratio of 3.83 and a quick ratio of 3.03.

Analyst Upgrades and Downgrades

Several research analysts have weighed in on the company. Weiss Ratings reissued a “sell (d-)” rating on shares of Applied Optoelectronics in a research report on Tuesday, July 7th. Rosenblatt Securities reaffirmed a “buy” rating and issued a $220.00 price objective on shares of Applied Optoelectronics in a research report on Friday. Wall Street Zen upgraded shares of Applied Optoelectronics from a “sell” rating to a “hold” rating in a research note on Saturday. Raymond James Financial set a $151.00 price target on shares of Applied Optoelectronics in a research note on Friday. Finally, Needham & Company LLC lowered their price target on shares of Applied Optoelectronics from $220.00 to $190.00 and set a “buy” rating on the stock in a report on Friday. Three research analysts have rated the stock with a Buy rating, two have issued a Hold rating and one has given a Sell rating to the company. According to MarketBeat.com, the stock presently has a consensus rating of “Hold” and a consensus target price of $134.00.

Key Stories Impacting Applied Optoelectronics

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

• Positive Sentiment: Q2 results exceeded expectations: Applied Optoelectronics reported adjusted EPS of $0.06 versus consensus estimates near $0.02–$0.03. Revenue reached approximately $191.9 million, ahead of estimates and up about 86% year over year from $103 million. Applied Optoelectronics Q2 Earnings Beat Estimates, Revenues Up Y/Y
• Positive Sentiment: AI datacenter demand is accelerating: Growth was driven by datacenter products, including rapidly expanding 800G optical transceivers. Management is also increasing capacity for 800G and 1.6T products, with demand reportedly exceeding available supply through at least mid-2027. AAOI Q2 Earnings Call Focuses on Capacity-Led 800G Ramp
• Positive Sentiment: Analyst support and industry momentum helped sentiment: Rosenblatt Securities reaffirmed its “buy” rating and assigned a $220 price target. Photonics and optics companies also benefited from strong sector earnings and expectations that potential U.S. restrictions on Chinese optical-transceiver imports could reduce overseas competition. Benzinga analyst rating report
• Neutral Sentiment: Expansion is being limited by supply: Management said it could sell more products if it had greater manufacturing capacity. Component shortages are expected to constrain near-term growth, even as they demonstrate strong underlying demand. Applied Optoelectronics says it could sell more if it could make more
• Negative Sentiment: Q3 profit guidance disappointed: The company forecast EPS of $0.11–$0.26, below the roughly $0.27 analyst consensus, although projected revenue of $255 million–$290 million brackets consensus near $265.7 million. Analysts also flagged competition, a setback in 100G products and valuation concerns after the stock’s substantial rally. Applied Optoelectronics slides amid mixed Q2 results and guidance

Insider Buying and Selling

In related news, CEO Chih-Hsiang (Thompson) Lin sold 59,000 shares of the business’s stock in a transaction on Friday, June 12th. The stock was sold at an average price of $166.53, for a total transaction of $9,825,270.00. Following the sale, the chief executive officer directly owned 1,302,436 shares in the company, valued at approximately $216,894,667.08. The trade was a 4.33% decrease in their position. The transaction was disclosed in a document filed with the SEC, which can be accessed through this hyperlink. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Also, Director Cynthia Delaney sold 56,575 shares of the stock in a transaction dated Tuesday, May 26th. The stock was sold at an average price of $189.23, for a total value of $10,705,687.25. Following the sale, the director directly owned 59,647 shares in the company, valued at $11,287,001.81. This trade represents a 48.68% decrease in their position. The disclosure for this sale is available in the SEC filing. Insiders sold 506,215 shares of company stock valued at $87,409,447 in the last 90 days. Corporate insiders own 3.80% of the company’s stock.

Hedge Funds Weigh In On Applied Optoelectronics

Large investors have recently modified their holdings of the company. Invesco Ltd. increased its holdings in Applied Optoelectronics by 5,208.9% during the 4th quarter. Invesco Ltd. now owns 3,512,309 shares of the semiconductor company’s stock worth $122,439,000 after acquiring an additional 3,446,150 shares during the period. XTX Topco Ltd grew its position in shares of Applied Optoelectronics by 167.6% during the 4th quarter. XTX Topco Ltd now owns 24,771 shares of the semiconductor company’s stock valued at $864,000 after purchasing an additional 15,513 shares in the last quarter. SummitTX Capital L.P. purchased a new position in shares of Applied Optoelectronics during the 4th quarter valued at $254,000. Quadrature Capital Ltd bought a new position in shares of Applied Optoelectronics in the fourth quarter worth $1,453,000. Finally, Millennium Management LLC bought a new position in shares of Applied Optoelectronics in the fourth quarter worth $358,000. 61.70% of the stock is currently owned by institutional investors.

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.