Applied Optoelectronics Inc (AAOI)
NASDAQ:AAOI
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Applied Optoelectronics
(NASDAQ:AAOI)
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Rating:59Neutral
Price Target:
$200.00
▲(25.45% Upside)
Action:Reiterated
Date:06/17/26
The score is driven primarily by weak financial quality (ongoing losses and significant cash burn) despite improving revenue and gross margins. Technicals are constructive with a clear uptrend, and the earnings call added support via upgraded growth/profitability targets, though execution, CapEx intensity, and customer concentration remain key risks. Valuation is constrained by negative earnings and no dividend.
Positive Factors
Strong revenue growth
Sustained top-line expansion and consecutive record quarters indicate durable demand and successful product adoption across data-center and CATV end markets. Strong revenue scale supports margin leverage, capacity investment and long-term customer engagement as ramps continue.
Negative Factors
Large negative cash flow
Persistent, sizable cash burn forces reliance on external financing and balance-sheet liquidity to fund CapEx and inventory during multi-year capacity builds. Continued negative OCF constrains flexibility and increases execution risk if demand or financing conditions weaken.
Read all positive and negative factors
Positive Factors
Negative Factors
Strong revenue growth
Sustained top-line expansion and consecutive record quarters indicate durable demand and successful product adoption across data-center and CATV end markets. Strong revenue scale supports margin leverage, capacity investment and long-term customer engagement as ramps continue.
Read all positive factors
Applied Optoelectronics (AAOI) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$12.99B
Dividend YieldN/A
Average Volume (3M)13.61M
Price to Earnings (P/E)―
Beta (1Y)3.15
Revenue Growth64.32%
EPS Growth82.92%
CountryUS
Employees3,309
SectorTechnology
Sector Strength88
IndustrySemiconductors
Share Statistics
EPS (TTM)-0.66
Shares Outstanding80,242,770
10 Day Avg. Volume15,768,276
30 Day Avg. Volume13,609,625
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 Cap1.01
Enterprise Value/Revenue25.94
Enterprise Value/Gross Profit87.51
Enterprise Value/Ebitda-792.82
Forecast
1Y Price Target
$151.30Price Target Upside-5.09% Downside
Rating ConsensusModerate Buy
Number of Analyst Covering5
EPS Forecast (FY)1.03
Revenue Forecast (FY)$1.04B
Applied Optoelectronics Business Overview & Revenue Model
Company Description
Applied Optoelectronics, Inc. (AAOI) is a global technology firm specializing in the creation, production, and distribution of fiber-optic networking solutions. Its extensive product catalog features optical modules, a range of laser components, s...
How the Company Makes Money
AAOI primarily makes money by selling fiber-optic communication products—most notably optical transceivers (pluggable modules that convert electrical signals to optical signals and back) used to connect network equipment in high-speed networks. Re...
Applied Optoelectronics Earnings Call Summary
Earnings Call Date:May 07, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Jul 30, 2026
Earnings Call Sentiment Positive
The call presents a constructive and growth-oriented outlook driven by record revenue, significant YoY data center expansion (154% YoY), early volume shipments/orders for next-generation 800G and 1.6T products, large capacity expansion plans, and a materially stronger cash position. Management upgraded 2026 revenue to >$1.1B and expects >$140M non-GAAP operating income, reflecting confidence in demand. Offsetting factors include ongoing non-GAAP and GAAP losses in Q1, lower near-term gross margins (29.2%), high customer concentration, capacity constraints that limit the near-term ability to meet demand, heavy CapEx and inventory build, and operational/qualification timing risks tied to long equipment lead times. Overall, the positive operational momentum, bookings, and upgraded guidance outweigh the execution and timing risks described on the call.Positive Updates
Record Quarterly Revenue and Strong Top-Line Growth
Q1 revenue of $151.1M, a record fourth consecutive quarter, up 51% year-over-year and up 13% sequentially; revenue was in line with guidance ($150M–$165M).
Negative Updates
Continued Non-GAAP and GAAP Losses
GAAP net loss of $14.3M ($0.19/share) in Q1 versus $9.2M a year ago; non-GAAP net loss of $4.9M ($0.07/share) widened from a non-GAAP net loss of $0.9M ($0.02/share) in Q1 of prior year.
Read all updates
Q1-2026 Updates
Positive
Negative
Record Quarterly Revenue and Strong Top-Line Growth
Q1 revenue of $151.1M, a record fourth consecutive quarter, up 51% year-over-year and up 13% sequentially; revenue was in line with guidance ($150M–$165M).
Read all positive updates
Company Guidance
The company guided to 2026 revenue of more than $1.1 billion and non‑GAAP operating income above $140 million, with Q2 revenue expected between $180 million and $198 million, non‑GAAP gross margin of 29%–30%, non‑GAAP net income of a loss of $2.5 million to income of $2.8 million (EPS -$0.03 to $0.03 on ~80.7M shares). Management expects rapid capacity‑driven growth: exiting Q1 they had ~100k units/month of 800G/1.6T capacity, expect to approach ~150k/month this quarter, to be capable of >650k pieces/month of 800G/1.6T by year‑end (≈30% U.S. output) and >930k/month by end‑2027 (>50% U.S.); mid‑2027 monthly data‑center revenue is forecast at roughly $90M (100G/400G) + $217M (800G) + $164M (1.6T) = ~$471M. They also expect ELSFP (CPO) production to ramp toward ~400k pieces/month by 2027, plan ~350% expansion in laser fabrication capacity by 2027, and flagged continued sizable quarterly CapEx above the Q1 spend of $68.7M; Q1 actuals to benchmark included $151.1M revenue, 29.2% non‑GAAP gross margin, non‑GAAP loss per share $0.07, cash + short‑term investments $449.4M, total debt (ex‑convertible) $77M, and $206.2M inventory.Applied Optoelectronics Financial Statement Overview
Summary
Income Statement
34
Negative
Balance Sheet
64
Positive
Cash Flow
22
Negative
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 507.00M | 455.71M | 249.37M | 217.65M | 222.82M | 211.56M |
| Gross Profit | 150.29M | 136.91M | 61.80M | 58.92M | 33.63M | 37.72M |
| EBITDA | -16.59M | -15.51M | -159.26M | -26.18M | -36.88M | -23.17M |
| Net Income | -43.34M | -38.23M | -186.73M | -56.05M | -66.40M | -54.16M |
Balance Sheet | ||||||
| Total Assets | 1.57B | 1.17B | 547.03M | 389.19M | 408.26M | 454.46M |
| Cash, Cash Equivalents and Short-Term Investments | 449.38M | 216.03M | 67.43M | 45.37M | 24.68M | 34.66M |
| Total Debt | 173.67M | 167.33M | 190.86M | 121.07M | 155.53M | 149.90M |
| Total Liabilities | 459.93M | 434.50M | 317.92M | 174.32M | 223.59M | 199.89M |
| Stockholders Equity | 1.11B | 733.92M | 229.11M | 214.87M | 184.67M | 254.57M |
Cash Flow | ||||||
| Free Cash Flow | -238.88M | -353.58M | -112.93M | -17.60M | -18.26M | -22.30M |
| Operating Cash Flow | -208.87M | -174.43M | -69.53M | -7.93M | -14.02M | -11.64M |
| Investing Cash Flow | -242.39M | -210.60M | -50.70M | -14.76M | -3.83M | -10.55M |
| Financing Cash Flow | 847.19M | 527.94M | 142.18M | 40.58M | 10.75M | 14.09M |
Applied Optoelectronics Technical Analysis
Neutral
159.42
Price Trends
169.83
Negative
123.51
Positive
76.89
Positive
Market Momentum
0.34
Positive
46.58
Neutral
13.88
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AAOI, the sentiment is Neutral. The current price of 159.42 is below the 20-day moving average (MA) of 178.16, below the 50-day MA of 169.83, and above the 200-day MA of 76.89, indicating a neutral trend. The MACD of 0.34 indicates Positive momentum. The RSI at 46.58 is Neutral, neither overbought nor oversold. The STOCH value of 13.88 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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 |
|---|---|---|---|---|---|---|---|
69 Neutral | $7.59B | 79.45 | 6.66% | ― | 19.69% | -17.14% | |
67 Neutral | $4.86B | 208.14 | 2.64% | ― | -7.71% | -66.03% | |
63 Neutral | $7.95B | -58.85 | -28.42% | ― | 40.89% | 42.62% | |
62 Neutral | $3.16B | 98.87 | 3.60% | 4.48% | -10.57% | -62.96% | |
62 Neutral | $6.38B | 115.87 | 6.59% | 1.77% | 11.16% | 179.18% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
59 Neutral | $12.99B | -283.76 | -6.14% | ― | 64.32% | 82.92% |
* Technology Sector Average
AAOI
Applied Optoelectronics
161.85
138.40
590.19%
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573.96%
VECO
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ACMR
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109.87
85.45
349.92%
Applied Optoelectronics Corporate Events
Business Operations and StrategyPrivate Placements and Financing
Applied Optoelectronics Doubles Chinese Credit Line Capacity
Positive
Jun 16, 2026
On June 11, 2026, Global Technology, Inc., a subsidiary of Applied Optoelectronics, entered into a new one-year credit line agreement with Shanghai Pudong Development Bank in Ningbo, China, doubling its available credit from RMB 250,000,000 to RMB...
Business Operations and StrategyShareholder Meetings
Applied Optoelectronics Shareholders Approve New Equity Plan
Positive
Jun 5, 2026
On June 4, 2026, Applied Optoelectronics shareholders approved a new 2026 Equity Incentive Plan at the company’s annual meeting, replacing its prior 2013 and 2021 equity plans and authorizing 2.5 million additional shares, plus unused and re...
Private Placements and FinancingRegulatory Filings and Compliance
Applied Optoelectronics Establishes $600 Million ATM Program
Positive
May 14, 2026
On May 14, 2026, Applied Optoelectronics, Inc. entered into an Equity Distribution Agreement with Raymond James Associates, Inc. and Needham Company, LLC that allows the company to issue and sell up to $600 million of its common stock through at...
Business Operations and Strategy
Applied Optoelectronics Signs Major Long-Term Houston Leases
Positive
May 13, 2026
On May 8, 2026, Applied Optoelectronics entered into three long-term leases with Hightower Phase I Owner for industrial buildings in Houston, Texas, to be used for manufacturing, warehouse, and office operations. The leases run for an initial term...
Business Operations and Strategy
Applied Optoelectronics Expands Texas Operations with Property Acquisition
Positive
Apr 13, 2026
On April 7, 2026, Applied Optoelectronics, Inc. entered into a purchase and sale agreement to acquire two industrial properties in Pearland, Texas, totaling about 388,133 square feet, for $58.4 million. The sites at Kirby Drive and North Spectrum ...
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.