Applied Optoelectronics (AAOI)
NASDAQ:AAOI
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Applied Optoelectronics
(NASDAQ:AAOI)
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Rating:55Neutral
Price Target:
$166.00
▲(4.13% Upside)
Action:ReiteratedDate:04/14/26
AAOI scores mid-range primarily due to improving financial performance trends (strong revenue growth and better gross margins, with improved leverage) but materially constrained by very weak cash generation and continued losses. Technicals are a positive contributor given strong upside momentum, though overbought readings raise pullback risk. Earnings-call guidance supports the outlook, but near-term execution risks (delays, tariffs, concentration, inventory, and elevated CapEx/opex) keep the overall score from moving higher.
Positive Factors
Revenue Growth Trend
An 83% revenue increase in 2025 demonstrates enduring demand for AAOI’s transceivers across data center and CATV end markets. Sustained top-line growth supports scale economics, increases bargaining power with suppliers/customers, and underpins a multi-quarter path toward profitability if execution holds.
Negative Factors
Weak Cash Generation
Persistent negative operating and free cash flow drives reliance on external funding and heightens dilution or debt risk. Sustained cash burn can constrain the company's ability to fund CapEx, R&D and working capital during scale-up, raising execution and liquidity pressure over multiple quarters.
Read all positive and negative factors
Positive Factors
Negative Factors
Revenue Growth Trend
An 83% revenue increase in 2025 demonstrates enduring demand for AAOI’s transceivers across data center and CATV end markets. Sustained top-line growth supports scale economics, increases bargaining power with suppliers/customers, and underpins a multi-quarter path toward profitability if execution holds.
Read all positive factors
Applied Optoelectronics (AAOI) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$12.80B
Dividend YieldN/A
Average Volume (3M)12.74M
Price to Earnings (P/E)―
Beta (1Y)3.29
Revenue Growth82.75%
EPS Growth84.71%
CountryUS
Employees3,309
SectorTechnology
Sector Strength88
IndustrySemiconductors
Share Statistics
EPS (TTM)-0.01
Shares Outstanding78,943,146
10 Day Avg. Volume13,357,390
30 Day Avg. Volume12,739,366
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 Cap0.85
Enterprise Value/Revenue23.95
Enterprise Value/Gross Profit79.71
Enterprise Value/Ebitda-683.73
Forecast
1Y Price Target
$82.25Price Target Upside-48.41% 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:May 07, 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
159.42
Price Trends
92.12
Positive
63.06
Positive
45.02
Positive
Market Momentum
18.10
Negative
70.54
Negative
92.86
Negative
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 159.42 is above the 20-day moving average (MA) of 118.39, above the 50-day MA of 92.12, and above the 200-day MA of 45.02, indicating a bullish trend. The MACD of 18.10 indicates Negative momentum. The RSI at 70.54 is Negative, neither overbought nor oversold. The STOCH value of 92.86 is Negative, 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 |
|---|---|---|---|---|---|---|---|
67 Neutral | $4.59B | 37.65 | -7.72% | 1.77% | -1.94% | -999.40% | |
64 Neutral | $3.12B | 380.33 | 4.13% | ― | -7.39% | -54.62% | |
63 Neutral | $3.69B | 26.91 | 7.79% | ― | 15.24% | -11.69% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
60 Neutral | $2.06B | 32.53 | 4.96% | 4.48% | -8.01% | -44.59% | |
59 Neutral | $5.40B | -8.44 | -27.73% | ― | 40.89% | 42.62% | |
55 Neutral | $12.80B | -54.88 | -7.54% | ― | 82.75% | 84.71% |
* Technology Sector Average
AAOI
Applied Optoelectronics
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1015.38%
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VECO
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155.91%
Applied Optoelectronics Corporate Events
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 ...
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.