Applied Optoelectronics (NASDAQ:AAOI) Posts Earnings Results

Applied Optoelectronics (NASDAQ:AAOI) announced its earnings results on Thursday. The semiconductor company reported $0.06 EPS for the quarter, topping the consensus estimate of $0.02 by $0.04, FiscalAI reports. Applied Optoelectronics had a negative net margin of 8.55% and a negative return on equity of 4.64%. The company had revenue of $191.92 million for the quarter, compared to analysts’ expectations of $190.48 million. During the same period last year, the firm earned ($0.16) earnings per share. The business’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 Price Performance

Shares of AAOI traded up $11.41 during midday trading on Friday, hitting $135.63. The company’s stock had a trading volume of 24,041,149 shares, compared to its average volume of 10,638,461. The company has a quick ratio of 3.03, a current ratio of 3.83 and a debt-to-equity ratio of 0.18. Applied Optoelectronics has a one year low of $18.50 and a one year high of $233.67. The stock has a market capitalization of $10.88 billion, a price-to-earnings ratio of -205.50 and a beta of 3.76. The company’s fifty day simple moving average is $137.79 and its two-hundred day simple moving average is $118.02.

Insiders Place Their Bets

In other news, insider David C. Kuo sold 29,227 shares of the firm’s stock in a transaction that occurred on Friday, June 12th. The shares were sold at an average price of $166.53, for a total value of $4,867,172.31. Following the sale, the insider directly owned 149,078 shares in the company, valued at approximately $24,825,959.34. This trade represents a 16.39% decrease in their position. The transaction was disclosed in a document filed with the SEC, which is accessible through this hyperlink. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Also, insider Hung-Lun (Fred) Chang sold 40,329 shares of Applied Optoelectronics stock in a transaction that occurred on Wednesday, June 17th. The shares were sold at an average price of $170.60, for a total transaction of $6,880,127.40. Following the sale, the insider directly owned 286,124 shares in the company, valued at $48,812,754.40. This trade represents a 12.35% decrease in their ownership of the stock. The disclosure for this sale is available in the SEC filing. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Insiders sold a total of 506,215 shares of company stock valued at $87,409,447 over the last ninety days. 3.80% of the stock is owned by insiders.

Institutional Investors Weigh In On Applied Optoelectronics

Several hedge funds have recently modified their holdings of the company. Invesco Ltd. boosted its holdings 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 valued at $122,439,000 after acquiring an additional 3,446,150 shares during the last quarter. Price T Rowe Associates Inc. MD lifted its position in shares of Applied Optoelectronics by 5,321.6% in the 4th quarter. Price T Rowe Associates Inc. MD now owns 2,229,757 shares of the semiconductor company’s stock worth $77,730,000 after purchasing an additional 2,188,630 shares during the period. Morgan Stanley boosted its stake in shares of Applied Optoelectronics by 157.1% in the 4th quarter. Morgan Stanley now owns 1,699,855 shares of the semiconductor company’s stock valued at $59,257,000 after purchasing an additional 1,038,775 shares during the last quarter. Hawk Ridge Capital Management LP boosted its stake in shares of Applied Optoelectronics by 106.2% in the 4th quarter. Hawk Ridge Capital Management LP now owns 1,700,900 shares of the semiconductor company’s stock valued at $59,293,000 after purchasing an additional 875,903 shares during the last quarter. Finally, Alyeska Investment Group L.P. acquired a new stake in shares of Applied Optoelectronics during the third quarter worth $19,738,000. Institutional investors and hedge funds own 61.70% of the company’s stock.

Wall Street Analysts Forecast Growth

A number of equities analysts have commented on AAOI shares. Weiss Ratings restated a “sell (d-)” rating on shares of Applied Optoelectronics in a research note on Tuesday, July 7th. Rosenblatt Securities reissued a “buy” rating and set a $220.00 target price on shares of Applied Optoelectronics in a report on Friday. Needham & Company LLC decreased their price target on Applied Optoelectronics from $220.00 to $190.00 and set a “buy” rating on the stock in a research report on Friday. Raymond James Financial set a $151.00 price target on Applied Optoelectronics in a research note on Friday. Finally, B. Riley Financial reaffirmed a “neutral” rating on shares of Applied Optoelectronics in a research report on Friday. Three investment analysts have rated the stock with a Buy rating, two have issued a Hold rating and one has assigned a Sell rating to the company’s stock. According to MarketBeat, Applied Optoelectronics currently has an average rating of “Hold” and a consensus price target of $134.00.

Applied Optoelectronics News Roundup

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

• Positive Sentiment: AAOI reported record second-quarter revenue of $191.9 million, up approximately 86% year over year and above the $190.5 million consensus estimate. Adjusted earnings of $0.06 per share also exceeded analysts’ expectations, compared with a $0.16 loss a year earlier. Applied Optoelectronics Q2 Earnings Beat Estimates, Revenues Up Y/Y
• Positive Sentiment: Growth was driven by data-center, CATV and rapidly expanding 800G transceiver demand tied to artificial-intelligence infrastructure. Management is also increasing capacity for 800G and 1.6T products, with demand expected to exceed production capacity through at least mid-2027. AAOI Q2 Earnings Call Focuses on Capacity-Led 800G Ramp
• Positive Sentiment: Rosenblatt Securities reaffirmed its Buy rating and assigned a $220 price target, indicating continued confidence in AAOI’s AI-related growth opportunity. Benzinga
• Neutral Sentiment: A potential U.S. restriction on imports of Chinese optical transceivers could improve the competitive environment for domestic suppliers such as AAOI, although the proposal remains uncertain and has not been finalized. Potential AI Transceiver Import Restrictions
• Negative Sentiment: Third-quarter EPS guidance of $0.11 to $0.26 is below the $0.27 analyst consensus, despite revenue guidance of $255 million to $290 million. Component shortages and a setback in 100G products may limit near-term growth. Mixed Q2 Results and Guidance
• Negative Sentiment: Investors remain concerned about supply constraints, competition and valuation after the stock’s substantial run-up. AAOI also continues to report negative net margins and return on equity, meaning profitability has not yet become durable. Should You Hold on to Applied Optoelectronics Stock Post Q2 Earnings?

Applied Optoelectronics Company Profile

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.