Applied Optoelectronics (AAOI)
NASDAQ:AAOI
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Applied Optoelectronics
(NASDAQ:AAOI)
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Rating:57Neutral
Price Target:
$89.00
▼(-14.35% Downside)
Action:ReiteratedDate:03/19/26
The score is held down primarily by weak financial quality—ongoing losses and especially significant cash burn—despite strong technical uptrend signals. Earnings-call guidance supports a bullish growth/profitability ramp, but execution, CapEx intensity, tariffs, and customer concentration risks temper confidence; valuation is also constrained by the negative P/E.
Positive Factors
Revenue & Margin Trajectory
Material top-line growth paired with expanding gross margins signals improving product-market fit and healthier unit economics. Sustained revenue momentum and margin expansion provide a durable path to operating leverage and the potential for structural profitability as scale benefits and mix improvements continue to take hold.
Negative Factors
Cash Burn / Weak Cash Generation
Significant negative operating and free cash flow materially raises funding risk and increases dependence on external capital. Persistent cash burn constrains the company’s ability to fund CapEx, inventory builds, and scaling internally, making dilution or additional debt likelier and stressing financial durability during expansion.
Read all positive and negative factors
Positive Factors
Negative Factors
Revenue & Margin Trajectory
Material top-line growth paired with expanding gross margins signals improving product-market fit and healthier unit economics. Sustained revenue momentum and margin expansion provide a durable path to operating leverage and the potential for structural profitability as scale benefits and mix improvements continue to take hold.
Read all positive factors
Applied Optoelectronics (AAOI) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$7.81B
Dividend YieldN/A
Average Volume (3M)12.70M
Price to Earnings (P/E)―
Beta (1Y)3.13
Revenue Growth101.25%
EPS Growth-56.11%
CountryUS
Employees3,309
SectorTechnology
Sector Strength88
IndustrySemiconductors
Share Statistics
EPS (TTM)-0.01
Shares Outstanding75,198,814
10 Day Avg. Volume12,726,694
30 Day Avg. Volume12,703,199
Financial Highlights & Ratios
PEG Ratio0.64
Price to Book (P/B)2.86
Price to Sales (P/S)4.60
P/FCF Ratio-5.93
Enterprise Value/Market Cap0.99
Enterprise Value/Revenue17.04
Enterprise Value/Gross Profit56.72
Enterprise Value/Ebitda-486.48
Forecast
1Y Price Target
$82.25Price Target Upside-20.84% Downside
Rating ConsensusModerate Buy
Number of Analyst Covering4
EPS Forecast (FY)0.94
Revenue Forecast (FY)$984.20M
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, an...
How the Company Makes Money
AAOI makes money primarily by selling optical networking hardware—most notably optical transceiver modules—directly to customers that build and operate communications infrastructure. Revenue is generated on a per-unit basis from product shipments,...
Applied Optoelectronics Earnings Call Summary
Earnings Call Date:Feb 26, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 30, 2026
Earnings Call Sentiment Positive
The call conveyed strong operational and commercial momentum: record 2025 revenue, substantial data center and CATV growth, improved margins, strengthened cash position, multiple 800G/1.6T customer engagements, and an ambitious 2026 revenue/profitability outlook. However, near-term execution risks were emphasized — notably firmware-driven delays for 800G, tariff exposure and uncertainty, elevated CapEx and operating expenses, inventory build-up, customer concentration, and the need to rapidly scale manufacturing to meet demand. Overall, management presented confident demand visibility and a clear capacity roadmap, but acknowledged short-term operational and macro policy headwinds that must be managed during the aggressive scale-up.Positive Updates
Record Full-Year Revenue and Strong YoY Growth
Total revenue for fiscal 2025 reached a record $456,000,000, an increase of 83% year-over-year.
Negative Updates
800G Firmware Delays Reduced Near-Term Revenue
Interoperability/firmware optimizations delayed 800G shipments and revenue; 800G revenue in the quarter came in below expectations (management said 'a bit below $4,000,000' and referenced a guided range that was missed), pushing the meaningful volume ramp into Q2.
Read all updates
Q4-2025 Updates
Positive
Negative
Record Full-Year Revenue and Strong YoY Growth
Total revenue for fiscal 2025 reached a record $456,000,000, an increase of 83% year-over-year.
Read all positive updates
Company Guidance
The company guided Q1 revenue of $150–165M with non‑GAAP gross margin of 29–31% and non‑GAAP net income of a loss of $7.0M to a loss of $0.3M (non‑GAAP EPS between a loss of $0.09 and breakeven) on a share base of ~76.4M; CATV revenue for Q1 is expected to be $61–67M. For full‑year 2026 management expects >$1.0B in revenue and >$120M of non‑GAAP operating profit (with non‑GAAP profitability targeted to begin in Q2), while reiterating a long‑term non‑GAAP gross margin goal of ~40%. Capacity targets include roughly 90k 800G units/month at year‑end (near a 100k/month target, ~31% U.S.-based today), a plan to be capable of producing >500k 800G/1.6T pieces per month by year‑end with ~25% from Texas, and forecasts that by mid‑2027 monthly transceiver revenue could be ~$90M (100G+400G), ~$217M (800G) and ~$71M (1.6T) — ~$378M total — with demand projected to exceed production through mid‑2027. Recent cash and balance‑sheet metrics: ~$216M in cash and equivalents, total debt (ex‑convertible) ~$67.3M, inventory ~$183.1M; 2025 CapEx was $209M (Q4 CapEx $84M).Applied Optoelectronics Financial Statement Overview
Summary
Income Statement
38
Negative
Balance Sheet
62
Positive
Cash Flow
25
Negative
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 455.71M | 249.37M | 217.65M | 222.82M | 211.56M |
| Gross Profit | 136.91M | 61.80M | 58.92M | 33.63M | 37.72M |
| EBITDA | -15.51M | -159.26M | -26.18M | -36.88M | -23.17M |
| Net Income | -38.23M | -186.73M | -56.05M | -66.40M | -54.16M |
Balance Sheet | |||||
| Total Assets | 1.17B | 547.03M | 389.19M | 408.26M | 454.46M |
| Cash, Cash Equivalents and Short-Term Investments | 216.03M | 67.43M | 45.37M | 24.68M | 34.66M |
| Total Debt | 167.33M | 190.86M | 121.07M | 155.53M | 149.90M |
| Total Liabilities | 434.50M | 317.92M | 174.32M | 223.59M | 199.89M |
| Stockholders Equity | 733.92M | 229.11M | 214.87M | 184.67M | 254.57M |
Cash Flow | |||||
| Free Cash Flow | -353.58M | -112.93M | -17.60M | -18.26M | -22.30M |
| Operating Cash Flow | -174.43M | -69.53M | -7.93M | -14.02M | -11.64M |
| Investing Cash Flow | -210.60M | -50.70M | -14.76M | -3.83M | -10.55M |
| Financing Cash Flow | 527.94M | 142.18M | 40.58M | 10.75M | 14.09M |
Applied Optoelectronics Technical Analysis
Positive
103.91
Price Trends
72.21
Positive
51.32
Positive
39.21
Positive
Market Momentum
5.26
Positive
56.69
Neutral
32.46
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AAOI, the sentiment is Positive. The current price of 103.91 is above the 20-day moving average (MA) of 99.95, above the 50-day MA of 72.21, and above the 200-day MA of 39.21, indicating a bullish trend. The MACD of 5.26 indicates Positive momentum. The RSI at 56.69 is Neutral, neither overbought nor oversold. The STOCH value of 32.46 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for AAOI.
Applied Optoelectronics Risk Analysis
Applied Optoelectronics disclosed 38 risk factors in its most recent earnings report. Applied Optoelectronics reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Applied Optoelectronics Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
62 Neutral | $2.08B | 47.89 | 4.13% | ― | -3.90% | -41.66% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
61 Neutral | $3.35B | 37.65 | -7.72% | 1.77% | -7.38% | 99.38% | |
60 Neutral | $1.35B | 32.53 | 4.96% | 4.48% | -3.62% | -20.33% | |
59 Neutral | $2.66B | 26.91 | 7.79% | ― | 20.77% | 26.08% | |
57 Neutral | $7.81B | -54.88 | -7.54% | ― | 101.25% | -56.11% | |
56 Neutral | $1.55B | -11.04 | -28.80% | ― | 7.53% | 22.97% |
* Technology Sector Average
AAOI
Applied Optoelectronics
103.91
92.68
825.29%
HIMX
Himax Technologies
7.93
2.04
34.73%
KLIC
Kulicke & Soffa
64.08
35.39
123.34%
MXL
Maxlinear
17.98
8.51
89.86%
VECO
Veeco
34.36
16.42
91.53%
ACMR
ACM Research
40.54
21.39
111.70%
Applied Optoelectronics Corporate Events
Business Operations and StrategyPrivate Placements and Financing
Applied Optoelectronics Expands At-The-Market Equity Offering Program
Neutral
Mar 12, 2026
On March 12, 2026, Applied Optoelectronics doubled the size of its at-the-market equity offering program, amending an agreement with Raymond James Associates and Needham Company to lift the total capacity from $250 million to $500 million in com...
Business Operations and Strategy
Applied Optoelectronics Expands FAB2 Cleanroom Manufacturing Capacity
Positive
Mar 5, 2026
On February 27, 2026, Applied Optoelectronics executed a design-build agreement, effective as of February 13, 2026, with LCC3 Solution Inc. to design and construct its FAB2 cleanroom project at 1111 Gillingham Lane in Sugar Land, Texas. The projec...
Business Operations and Strategy
Applied Optoelectronics Signs Long-Term Houston Facility Lease
Positive
Feb 27, 2026
On February 23, 2026, Applied Optoelectronics, Inc. signed a 130‑month lease, effective February 10, 2026, for about 153,928 square feet of office, warehouse and light manufacturing and assembly space in Building #3 at Blue Ridge Commerce Ce...
Private Placements and FinancingRegulatory Filings and Compliance
Applied Optoelectronics Launches $250 Million ATM Offering
Neutral
Feb 26, 2026
On February 26, 2026, Applied Optoelectronics entered into an Equity Distribution Agreement with Raymond James Associates and Needham Company, allowing it to issue and sell up to $250 million of common stock from time to time through at-the-mark...
Executive/Board Changes
Applied Optoelectronics Enhances Executive Severance and Retention Terms
Neutral
Feb 19, 2026
On February 13, 2026, Applied Optoelectronics’ compensation committee approved amendments to executive employment agreements for four senior leaders, including the CFO and regional general managers, to enhance severance protections. The chan...
Business Operations and Strategy
Applied Optoelectronics Breaks Ground on New Texas Facility
Positive
Feb 13, 2026
Applied Optoelectronics, Inc., a maker of advanced optical and HFC networking products for AI datacenters and broadband networks, is expanding its manufacturing footprint at its Sugar Land, Texas headquarters. The company, which serves tier-one cl...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.