Applied Optoelectronics (AAOI) AI Stock Analysis

• Market Cap: $916.19M
• Dividend Yield: N/A
• Average Volume (3M): 3.48M
• Price to Earnings (P/E): ―
• Beta (1Y): 3.20
• Revenue Growth: 50.30%
• EPS Growth: -111.11%
• Country: US
• Employees: 3,309
• Sector: Technology
• Sector Strength: 82
• Industry: Semiconductors
• EPS (TTM): -0.02
• Shares Outstanding: 56,139,130
• 10 Day Avg. Volume: 2,971,885
• 30 Day Avg. Volume: 3,480,238
• PEG Ratio: -0.04
• Price to Book (P/B): 0.28
• Price to Sales (P/S): 0.00
• P/FCF Ratio: -2.88
• Enterprise Value/Market Cap: 0.18
• Enterprise Value/Revenue: 0.17
• Enterprise Value/Gross Profit: 1.97
• Enterprise Value/Ebitda: -0.41
• 1Y Price Target: $32.67
• Price Target Upside: 111.18% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 3

• Rating: 55 Neutral
• Price Target: $17.50 ▲(13.12%Upside)

The overall stock score is driven by financial difficulties and valuation concerns, but is partially offset by positive technical indicators and promising corporate events. Challenges in profitability and cash flow significantly impact the score, despite operational improvements and strategic expansions.

Positive Factors

Customer Diversification

Oracle becoming a 10% customer indicates potential for diversified revenue streams.

Financial Valuation

The stock trading at approximately 2x revenue suggests it isn't excessively expensive.

Key Customer Stability

With Microsoft as the top customer, the company could sustain quarterly revenue of around $100M even if CATV slows down.

Negative Factors

Product Qualification Uncertainty

Management expects 800G to ramp up, but it hasn't been qualified by any hyperscalers yet, which poses uncertainty.

Product Transition Impact

Demand for 400G may start to decay as the industry transitions from Hopper to Blackwell, impacting future growth.

Revenue Sustainability

CATV strength may not be sustainable, raising concerns about future revenue sources.

Applied Optoelectronics Business Overview & Revenue Model

Company Description

Applied Optoelectronics, Inc. designs, manufactures, and sells various fiber-optic networking products worldwide. It offers optical modules, lasers, subassemblies, transmitters and transceivers, and turn-key equipment, as well as headend, node, and distribution equipment. The company sells its products to internet data center operators, cable television and telecom equipment manufacturers, and internet service providers through its direct and indirect sales channels. Applied Optoelectronics, Inc. was incorporated in 1997 and is headquartered in Sugar Land, Texas.

How the Company Makes Money

Applied Optoelectronics generates revenue through the sale of its optical products and solutions, primarily to large data center operators and telecommunications service providers. The company's key revenue streams include the manufacturing and distribution of optical transceivers, which are essential for high-speed data transmission in data centers and broadband networks. Additionally, AAOI partners with major technology and telecommunications companies to enhance its product offerings and expand its market reach. The company's earnings are significantly influenced by technological advancements, demand for high-speed internet, and the growth of cloud computing and streaming services, which drive the need for more robust and efficient optical networking solutions.

Applied Optoelectronics Financial Statement Overview

Summary

Applied Optoelectronics is experiencing financial difficulties characterized by declining revenues, high losses, and cash flow deficits. The company's operational inefficiencies and leverage position need addressing to improve financial health and shareholder value.

Income Statement

The company has faced declining revenues with a significant negative net income, suggesting profitability challenges. The gross profit margin is modest at 27.4% TTM, and the company has consistently reported negative EBIT and EBITDA margins, indicating operational inefficiencies.

Balance Sheet

The company's debt-to-equity ratio stands at 0.53 TTM, reflecting moderate leverage. However, the negative return on equity of -55.9% TTM highlights poor profitability for shareholders. The equity ratio of 47.9% TTM suggests a balanced asset financing mix between debt and equity.

Cash Flow

Free cash flow growth is negative, with a substantial free cash flow deficit of -$158 million TTM. The operating cash flow to net income ratio is 0.53 TTM, indicating inadequate cash generation relative to losses. This suggests cash flow constraints amid operational challenges.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
308.55M	249.37M	217.65M	222.82M	211.56M	234.62M
	Gross Profit
84.65M	61.80M	58.92M	33.63M	37.72M	50.54M
	EBIT
-58.20M	-70.91M	-41.35M	-59.00M	-56.77M	-46.13M
	EBITDA
-152.73M	-159.26M	-26.18M	-36.88M	-23.17M	-20.86M
	Net Income Common Stockholders
-172.74M	-186.73M	-56.05M	-66.40M	-54.16M	-58.45M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
51.14M	67.43M	45.37M	35.59M	41.14M	43.42M
	Total Assets
644.67M	547.03M	389.19M	408.26M	454.46M	480.81M
	Total Debt
164.50M	190.86M	121.07M	150.02M	142.65M	154.92M
	Net Debt
113.35M	123.43M	75.71M	114.43M	101.51M	111.50M
	Total Liabilities
335.65M	317.92M	174.32M	223.59M	199.89M	202.91M
	Stockholders Equity
309.01M	229.11M	214.87M	184.67M	254.57M	277.89M
Cash Flow		Free Cash Flow
-158.00M	-112.93M	-17.60M	-18.26M	-22.30M	-63.57M
	Operating Cash Flow
-91.96M	-69.53M	-7.93M	-14.02M	-11.64M	-44.01M
	Investing Cash Flow
-78.93M	-50.70M	-14.76M	-3.83M	-10.55M	-19.35M
	Financing Cash Flow
213.61M	142.18M	40.58M	10.75M	14.09M	47.44M

Applied Optoelectronics Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 15.47
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AAOI, the sentiment is Negative. The current price of 15.47 is below the 20-day moving average (MA) of 17.12, above the 50-day MA of 14.86, and below the 200-day MA of 21.59, indicating a neutral trend. The MACD of 0.05 indicates Positive momentum. The RSI at 44.61 is Neutral, neither overbought nor oversold. The STOCH value of 30.99 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for AAOI.

Applied Optoelectronics Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DJCO	75 Outperform	$586.33M	5.32	37.53%	―	1.99%	375.37%
FSLY	66 Neutral	$1.16B	―	-15.78%	―	6.26%	-9.54%
NTGR	63 Neutral	$858.61M	36.06	4.78%	―	-6.97%	―
Sector *	62 Neutral	$11.92B	10.48	-7.50%	2.95%	7.40%	-8.18%
ADTN	59 Neutral	$627.46M	―	-66.95%	―	-10.18%	75.30%
ICHR	56 Neutral	$652.71M	―	-2.35%	―	13.41%	72.56%
AAOI	55 Neutral	$916.19M	―	-68.45%	―	50.30%	-111.11%

Applied Optoelectronics Corporate Events

Applied Optoelectronics Approves Share Increase at Annual Meeting

On June 12, 2025, Applied Optoelectronics, Inc. held its Annual Meeting of Stockholders, where an amendment to increase the number of authorized shares of common and capital stock was approved. The amendment, which raised the authorized common stock from 80 million to 120 million shares, was filed and became effective the same day. Additionally, the meeting included the election of directors, ratification of the company’s accounting firm, and approval of executive compensation, reflecting significant shareholder engagement with a 63.06% representation of eligible shares.

The most recent analyst rating on (AAOI) stock is a Buy with a $17.00 price target. To see the full list of analyst forecasts on Applied Optoelectronics stock, see the AAOI Stock Forecast page.

Applied Optoelectronics Signs 15-Year Lease in Taiwan

On June 7, 2025, Prime World International Holdings Ltd., a subsidiary of Applied Optoelectronics, Inc., signed a 15-year lease agreement with San Ho Electric Machinery Industry Co., Ltd. for a property in Taoyuan City, Taiwan. This strategic move allows Prime World to modify the building to meet production needs and includes rights such as first refusal to purchase or renew the lease, potentially enhancing the company’s operational capabilities and market positioning.

The most recent analyst rating on (AAOI) stock is a Buy with a $17.00 price target. To see the full list of analyst forecasts on Applied Optoelectronics stock, see the AAOI Stock Forecast page.

Applied Optoelectronics Signs $100M Equity Distribution Deal

On May 28, 2025, Applied Optoelectronics, Inc. entered into an Equity Distribution Agreement with Raymond James & Associates, Inc. and Needham & Company, LLC to issue and sell up to $100 million worth of common stock through the Sales Agents. The agreement allows for ‘at the market’ offerings, with the company maintaining the flexibility to suspend sales and determine the terms of each transaction. The Sales Agents are entitled to a 2% commission on sales, and the agreement includes provisions for reimbursement and indemnification of the Sales Agents. This move could potentially enhance the company’s liquidity and provide financial flexibility, impacting its market positioning and stakeholder interests.

The most recent analyst rating on (AAOI) stock is a Buy with a $17.00 price target. To see the full list of analyst forecasts on Applied Optoelectronics stock, see the AAOI Stock Forecast page.