Applied Optoelectronics (AAOI) AI Stock Analysis

• Market Cap: $1.45B
• Dividend Yield: N/A
• Average Volume (3M): 5.67M
• Price to Earnings (P/E): ―
• Beta (1Y): 2.83
• Revenue Growth: 50.30%
• EPS Growth: -111.11%
• Country: US
• Employees: 3,309
• Sector: Technology
• Sector Strength: 86
• Industry: Semiconductors
• EPS (TTM): -0.02
• Shares Outstanding: 56,139,130
• 10 Day Avg. Volume: 3,920,484
• 30 Day Avg. Volume: 5,671,595
• PEG Ratio: -0.85
• Price to Book (P/B): 4.67
• Price to Sales (P/S): 0.00
• P/FCF Ratio: -10.24
• Enterprise Value/Market Cap: 1.21
• Enterprise Value/Revenue: 1.80
• Enterprise Value/Gross Profit: 20.73
• Enterprise Value/Ebitda: -4.27
• 1Y Price Target: $33.50
• Price Target Upside: 29.64% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 5

• Rating: 50 Neutral
• Price Target: $26.00 ▲(0.62%Upside)

The overall stock score reflects significant financial challenges, including declining revenues and cash flow deficits, which weigh heavily on the stock. However, positive factors such as strong performance in specific segments, recent strategic corporate moves, and some technical momentum provide a balanced outlook.

Positive Factors

Customer Diversification

Oracle was a new 10% customer, indicating potential for diversified revenue streams.

Revenue Sustainability

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

Negative Factors

Future Revenue Concerns

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

Growth Uncertainty

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

Product Qualification

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

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 faces significant financial challenges with declining revenues and negative profitability. The company reports operational inefficiencies and cash flow deficits, indicating financial distress.

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	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	249.37M	217.65M	222.82M	211.56M	234.62M
Gross Profit	61.80M	58.92M	33.63M	37.72M	50.54M
EBITDA	-159.26M	-26.18M	-36.88M	-23.17M	-20.86M
Net Income	-186.73M	-56.05M	-66.40M	-54.16M	-58.45M
Balance Sheet
Total Assets	547.03M	389.19M	408.26M	454.46M	480.81M
Cash, Cash Equivalents and Short-Term Investments	67.43M	45.37M	35.59M	41.14M	43.42M
Total Debt	190.86M	121.07M	150.02M	142.65M	154.92M
Total Liabilities	317.92M	174.32M	223.59M	199.89M	202.91M
Stockholders Equity	229.11M	214.87M	184.67M	254.57M	277.89M
Cash Flow
Free Cash Flow	-112.93M	-17.60M	-18.26M	-22.30M	-63.57M
Operating Cash Flow	-69.53M	-7.93M	-14.02M	-11.64M	-44.01M
Investing Cash Flow	-50.70M	-14.76M	-3.83M	-10.55M	-19.35M
Financing Cash Flow	142.18M	40.58M	10.75M	14.09M	47.44M

Applied Optoelectronics Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 25.84
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• 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 Neutral. The current price of 25.84 is below the 20-day moving average (MA) of 27.54, above the 50-day MA of 22.01, and above the 200-day MA of 23.32, indicating a neutral trend. The MACD of 1.55 indicates Positive momentum. The RSI at 51.24 is Neutral, neither overbought nor oversold. The STOCH value of 12.35 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for AAOI.

Applied Optoelectronics Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ACMR	80 Outperform	$1.93B	19.30	12.21%	―	26.21%	17.34%
HIMX	74 Outperform	$1.71B	19.48	9.79%	3.87%	0.61%	80.97%
VECO	74 Outperform	$1.26B	19.71	8.68%	―	3.30%	―
Sector *	63 Neutral	$34.70B	4.89	-11.39%	1.66%	5.53%	-19.00%
KLIC	61 Neutral	$1.84B	96.21	2.29%	2.92%	-6.17%	―
MXL	57 Neutral	$1.50B	―	-37.97%	―	-15.65%	-7.18%
AAOI	50 Neutral	$1.45B	―	-68.45%	―	50.30%	-111.11%

Applied Optoelectronics Corporate Events

Applied Optoelectronics Secures New Credit Facility

On July 18, 2025, Global Technology, a subsidiary of Applied Optoelectronics, secured an 82,000,000 RMB credit facility with Shanghai Pudong Development Bank to repay loans and for general corporate purposes. By July 23, 2025, Global Technology utilized this facility to clear its debts with China Zheshang Bank, terminating the previous credit line without penalties.

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 Secures Major Credit Line Agreement

On June 26, 2025, Global Technology, a subsidiary of Applied Optoelectronics, Inc., secured a five-year revolving credit line agreement totaling 162,260,000 RMB with China Construction Bank in Ningbo City, China. This credit line, intended for general corporate and capital investment purposes, allows Global Technology to draw funds until June 26, 2030, with each draw subject to bank approval and secured by the company’s real property.

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 Settles Credit Line Obligations

On June 12, 2025, Global Technology, a subsidiary of Applied Optoelectronics, secured a one-year credit facility worth 96,800,000 RMB with China Construction Bank to repay outstanding loans with Shanghai Pudong Development Bank. By June 18, 2025, Global Technology used the credit facility to settle its obligations under a previous revolving credit line with Shanghai Pudong Development Bank, terminating the associated agreements without incurring penalties.

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 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.