Applied Optoelectronics (AAOI) AI Stock Analysis

• Market Cap: $1.41B
• Dividend Yield: N/A
• Average Volume (3M): 5.63M
• Price to Earnings (P/E): ―
• Beta (1Y): 3.27
• Revenue Growth: 101.25%
• EPS Growth: -56.11%
• Country: US
• Employees: 3,309
• Sector: Technology
• Sector Strength: 88
• Industry: Semiconductors
• EPS (TTM): -0.09
• Shares Outstanding: 68,279,884
• 10 Day Avg. Volume: 6,203,602
• 30 Day Avg. Volume: 5,633,514
• PEG Ratio: -0.05
• Price to Book (P/B): 6.68
• Price to Sales (P/S): 6.14
• P/FCF Ratio: -13.56
• Enterprise Value/Market Cap: 1.23
• Enterprise Value/Revenue: 4.09
• Enterprise Value/Gross Profit: 13.96
• Enterprise Value/Ebitda: -13.59
• 1Y Price Target: $30.75
• Price Target Upside: 49.42% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 4
• EPS Forecast (FY): -0.32
• Revenue Forecast (FY): $452.74M

• Rating: 42 Neutral
• Price Target: $20.00 ▼(-2.82% Downside)

The overall stock score is primarily influenced by weak financial performance and bearish technical indicators. The company's negative profitability and cash flow issues are significant concerns. Although the earnings call provided some positive future guidance, the current financial and technical challenges weigh heavily on the stock's attractiveness.

Positive Factors

Revenue Growth

Strong revenue growth indicates robust demand for AAOI's products, enhancing its market position and supporting long-term business expansion.

Product Qualification Progress

Advancements in 800G product qualification suggest future revenue streams and strengthen AAOI's competitive edge in high-speed data transmission.

Production Expansion

Expanding production capacity in the U.S. enhances AAOI's ability to meet demand and reduces supply chain risks, supporting long-term growth.

Negative Factors

Profitability Challenges

Persistent profitability issues indicate operational inefficiencies, which could hinder AAOI's ability to invest in growth and innovation.

Cash Flow Issues

Negative cash flow limits AAOI's financial flexibility, potentially affecting its ability to fund operations and strategic initiatives.

Higher Operating Expenses

Rising operating expenses can pressure margins and reduce profitability, challenging AAOI's efforts to achieve sustainable financial health.

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 primarily through the sale of optical networking products, including optical transceivers used in data centers and telecommunications infrastructures. The company also earns income from its semiconductor lasers and photodiodes, which are critical components in fiber optic communication systems. Key revenue streams include direct sales to large technology companies and telecommunications providers, as well as partnerships with major data center operators. Additionally, AAOI may benefit from government contracts and collaborations with research institutions, which contribute to its earnings by expanding its market reach and enhancing product development capabilities.

Applied Optoelectronics Financial Statement Overview

Summary

Applied Optoelectronics shows a mixed financial performance with positive revenue growth but struggles with profitability and cash flow management. The income statement reveals operational inefficiencies, while the balance sheet indicates moderate stability with improved leverage. However, negative cash flows highlight liquidity issues.

Income Statement

Applied Optoelectronics shows a mixed performance in its income statement. The company has a positive revenue growth rate of 14.52% TTM, indicating potential market demand. However, profitability remains a significant concern with negative net profit and EBIT margins, suggesting operational inefficiencies and cost management issues. The gross profit margin has improved to 29.33% TTM, but the overall negative margins highlight ongoing challenges in achieving profitability.

Balance Sheet

The balance sheet reflects moderate financial stability. The debt-to-equity ratio has improved to 0.36 TTM, indicating better leverage management compared to previous years. However, the negative return on equity of -40.97% TTM suggests that the company is not generating sufficient returns on shareholders' investments. The equity ratio stands at 57.13% TTM, showing a reasonable level of equity financing relative to total assets.

Cash Flow

Cash flow analysis reveals significant challenges. The operating cash flow and free cash flow are both negative, indicating cash outflows from operations. Although the free cash flow growth rate is positive at 23.91% TTM, the overall cash flow situation remains concerning. The free cash flow to net income ratio of 1.78 TTM suggests some efficiency in converting income to cash, but the negative operating cash flow to net income ratio highlights ongoing liquidity issues.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	421.71M	249.37M	217.65M	222.82M	211.56M	234.62M
Gross Profit	123.70M	61.80M	58.92M	33.63M	37.72M	50.54M
EBITDA	-127.09M	-159.26M	-26.18M	-36.88M	-23.17M	-20.86M
Net Income	-155.90M	-186.73M	-56.05M	-66.40M	-54.16M	-58.45M
Balance Sheet
Total Assets	978.53M	547.03M	389.19M	408.26M	454.46M	480.81M
Cash, Cash Equivalents and Short-Term Investments	136.96M	67.43M	45.37M	24.68M	34.66M	43.42M
Total Debt	235.16M	190.86M	121.07M	155.53M	149.90M	154.92M
Total Liabilities	419.44M	317.92M	174.32M	223.59M	199.89M	202.91M
Stockholders Equity	559.09M	229.11M	214.87M	184.67M	254.57M	277.89M
Cash Flow
Free Cash Flow	-302.26M	-112.93M	-17.60M	-18.26M	-22.30M	-63.57M
Operating Cash Flow	-169.47M	-69.53M	-7.93M	-14.02M	-11.64M	-44.01M
Investing Cash Flow	-154.94M	-50.70M	-14.76M	-3.83M	-10.55M	-19.35M
Financing Cash Flow	437.96M	142.18M	40.58M	10.75M	14.09M	47.44M

Applied Optoelectronics Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 20.58
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

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 20.58 is below the 20-day moving average (MA) of 27.54, below the 50-day MA of 28.88, and below the 200-day MA of 22.65, indicating a bearish trend. The MACD of -2.92 indicates Positive momentum. The RSI at 34.53 is Neutral, neither overbought nor oversold. The STOCH value of 17.01 is Positive, 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
VECO	70 Neutral	$1.66B	31.83	6.12%	―	-3.90%	-41.66%
ACMR	66 Neutral	$1.95B	17.55	10.09%	―	20.77%	26.08%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
HIMX	61 Neutral	$1.25B	19.96	7.17%	5.15%	-3.62%	-20.33%
KLIC	56 Neutral	$2.14B	10,220.00	0.02%	2.10%	-7.38%	99.38%
MXL	45 Neutral	$1.19B	―	-35.16%	―	7.53%	22.97%
AAOI	42 Neutral	$1.41B	―	-40.43%	―	101.25%	-56.11%

Applied Optoelectronics Corporate Events

Applied Optoelectronics’ Earnings Call Highlights Record Revenue

Applied Optoelectronics Inc. recently held its earnings call, reflecting a strong performance with record-breaking revenue, primarily driven by the CATV segment. Despite facing challenges in the datacenter segment due to shipment delays and higher-than-expected operating expenses, the overall sentiment was positive, showcasing the benefits of diversified revenue streams.

Applied Optoelectronics Enters Equity Distribution Agreement

On November 7, 2025, Applied Optoelectronics, Inc. entered into an Equity Distribution Agreement with Raymond James & Associates, Inc. and Needham & Company, LLC to potentially issue and sell shares worth up to $180 million. This agreement allows the company to conduct ‘at the market’ offerings, providing flexibility in raising capital while compensating the sales agents with a 2% fee on gross sales. The arrangement includes provisions for reimbursement of certain expenses and indemnification against liabilities, potentially impacting the company’s financial strategy and market operations.

The most recent analyst rating on (AAOI) stock is a Buy with a $38.00 price target. To see the full list of analyst forecasts on Applied Optoelectronics stock, see the AAOI Stock Forecast page.

Applied Optoelectronics’ Q3 2025 Financial Performance

Applied Optoelectronics, Inc. (AOI) is a prominent developer and manufacturer of advanced optical and HFC networking products, catering to AI datacenters, CATV, and broadband fiber access networks globally, with facilities in the U.S., Taiwan, and China.

Applied Optoelectronics Signs New Lease Agreement

On October 28, 2025, Prime World International Holdings Ltd., a subsidiary of Applied Optoelectronics, Inc., signed a new lease agreement with International Games System Co., Ltd. for a property in New Taipei City. This agreement allows Prime World to become the sole tenant of the entire property, with a lease term from December 1, 2025, to October 31, 2040, and includes rights such as first refusal on purchase and renewal, and protection against early termination.

The most recent analyst rating on (AAOI) stock is a Hold with a $39.00 price target. To see the full list of analyst forecasts on Applied Optoelectronics stock, see the AAOI Stock Forecast page.

Applied Optoelectronics Signs Major Lease Agreement

On September 19, 2025, Applied Optoelectronics, Inc. entered into a lease agreement with Coleman Logistics Assets LLC for a 209,665 square foot space in Sugar Land, Texas, primarily for manufacturing operations. The lease, set for a term of 126 months, includes a construction allowance for improvements and features a base rent that escalates over time. The agreement also grants the company rights such as a right of first refusal for contiguous space and options to renew the lease, potentially impacting its operational capacity and market positioning.

The most recent analyst rating on (AAOI) stock is a Hold with a $23.50 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 Agreement

On September 1, 2025, Applied Optoelectronics‘ subsidiary, Prime World International Holdings Ltd., entered into a 15-year lease agreement for a property in New Taipei City, which includes a building and land. The lease allows for modifications to accommodate production needs and includes rights such as first refusal for purchase and renewal, ensuring strategic flexibility and operational stability for the company.

The most recent analyst rating on (AAOI) stock is a Hold with a $23.50 price target. To see the full list of analyst forecasts on Applied Optoelectronics stock, see the AAOI Stock Forecast page.

Applied Optoelectronics Signs Equity Distribution Agreement

On August 27, 2025, Applied Optoelectronics, Inc. entered into an Equity Distribution Agreement with Raymond James & Associates, Inc. and Needham & Company, LLC, allowing the company to issue and sell up to $150 million worth of common stock through these sales agents. This agreement facilitates ‘at the market’ offerings, providing flexibility for the company to raise capital as needed, while also detailing compensation and reimbursement terms for the sales agents. The agreement can be terminated by either party and includes indemnification clauses for the sales agents.

The most recent analyst rating on (AAOI) stock is a Hold with a $22.50 price target. To see the full list of analyst forecasts on Applied Optoelectronics stock, see the AAOI Stock Forecast page.

Applied Optoelectronics Terminates Lease with San Ho Electric

On August 20, 2025, Prime World International Holdings Ltd., a subsidiary of Applied Optoelectronics, Inc., agreed to terminate its lease with San Ho Electric Machinery Industry Co., Ltd., effective August 31, 2025. As part of the termination, Prime World will pay NT$9,400,000 to settle all obligations, ensuring no further claims between the parties, which may impact the company’s operational logistics and financial commitments.

The most recent analyst rating on (AAOI) stock is a Hold with a $22.50 price target. To see the full list of analyst forecasts on Applied Optoelectronics stock, see the AAOI Stock Forecast page.