Applied Optoelectronics (AAOI) AI Stock Analysis

• Market Cap: $2.07B
• Dividend Yield: N/A
• Average Volume (3M): 5.14M
• Price to Earnings (P/E): ―
• Beta (1Y): 3.38
• 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: 3,972,240
• 30 Day Avg. Volume: 5,140,701
• 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: 0.83
• Enterprise Value/Revenue: 4.09
• Enterprise Value/Gross Profit: 13.96
• Enterprise Value/Ebitda: -13.59
• 1Y Price Target: $38.25
• Price Target Upside: 5.31% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 4
• EPS Forecast (FY): -0.32
• Revenue Forecast (FY): $452.74M

• Rating: 52 Neutral
• Price Target: $28.00 ▼(-22.91% Downside)

The overall score reflects significant challenges in financial performance and valuation, partially offset by positive earnings call guidance and corporate events. The company's ability to manage profitability and cash flow will be crucial for future performance.

Positive Factors

Revenue Growth

Record-breaking revenue growth indicates strong market demand and effective sales strategies, enhancing long-term business prospects.

Product Expansion

Advancing in 800G product qualification positions the company to capture emerging market opportunities, supporting future revenue streams.

Financial Flexibility

The new credit facility improves financial flexibility, allowing the company to better manage risks and invest in growth initiatives.

Negative Factors

Profitability Challenges

Ongoing profitability issues highlight operational inefficiencies, which could hinder long-term financial health and investor confidence.

Cash Flow Issues

Negative cash flows suggest liquidity challenges, potentially limiting the company's ability to fund operations and growth initiatives.

Data Center Segment Challenges

Challenges in the data center segment could impact revenue stability and indicate potential market or operational issues needing resolution.

Applied Optoelectronics Business Overview & Revenue Model

Company Description

Applied Optoelectronics, Inc. (AAOI) is a leading provider of fiber-optic networking products, primarily serving the data center, telecommunications, and cable television industries. The company specializes in the design and manufacturing of advanced optical components and integrated modules, including lasers, photodetectors, and transceivers. With a focus on delivering high-performance solutions, AAOI plays a critical role in enabling high-speed data transmission and connectivity in a rapidly evolving digital landscape.

How the Company Makes Money

Applied Optoelectronics generates revenue through the sale of its optical components and transceivers, which are critical for high-speed data communications in data centers and telecommunications networks. Key revenue streams include the sale of 100G, 200G, and 400G optical transceivers, as well as other related products. The company also benefits from partnerships with major technology firms and telecommunications providers, which allow it to secure large-scale contracts and ensure a steady demand for its products. Additionally, AAOI invests in research and development to innovate and enhance its product offerings, strategically positioning itself in the competitive optical networking market and enabling it to capture new business opportunities.

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: Positive
• Last Price: 36.32
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: 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 36.32 is above the 20-day moving average (MA) of 25.20, above the 50-day MA of 28.77, and above the 200-day MA of 22.69, indicating a bullish trend. The MACD of 1.35 indicates Negative momentum. The RSI at 72.72 is Negative, neither overbought nor oversold. The STOCH value of 95.22 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for AAOI.

Applied Optoelectronics Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ACMR	72 Outperform	$2.40B	23.08	10.09%	―	20.77%	26.08%
VECO	70 Neutral	$1.94B	38.93	6.12%	―	-3.90%	-41.66%
HIMX	69 Neutral	$1.65B	26.35	7.17%	4.06%	-3.62%	-20.33%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
KLIC	61 Neutral	$2.59B	12,382.50	0.02%	1.72%	-7.38%	99.38%
MXL	60 Neutral	$1.71B	―	-35.16%	―	7.53%	22.97%
AAOI	52 Neutral	$2.07B	―	-40.43%	―	101.25%	-56.11%

Applied Optoelectronics Corporate Events

Applied Optoelectronics Secures New Credit Facility

On November 27, 2025, Prime World International Holdings, Ltd., a subsidiary of Applied Optoelectronics, Inc., secured a credit facility with Taishin International Bank in Taiwan, comprising a NT$100,000,000 line of credit and a US$2,000,000 line of credit. The NT$100M Credit Line can be used for short-term loans with a revolving basis, while the US$2M Credit Line is intended for foreign exchange hedging transactions. This agreement, secured by a promissory note, is expected to enhance Prime World’s financial flexibility and risk management capabilities.

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.

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.

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.