Applied Optoelectronics (NASDAQ:AAOI) Issues Earnings Results

Applied Optoelectronics (NASDAQ:AAOI) released its quarterly earnings data on Thursday. The semiconductor company reported $0.06 earnings per share for the quarter, beating the consensus estimate of $0.02 by $0.04, FiscalAI reports. Applied Optoelectronics had a negative return on equity of 4.64% and a negative net margin of 8.55%.The company had revenue of $191.92 million for the quarter, compared to analyst estimates of $190.48 million. During the same period in the prior year, the company posted ($0.16) EPS. The company’s revenue was up 86.3% compared to the same quarter last year. Applied Optoelectronics updated its Q3 2026 guidance to 0.110-0.260 EPS.

Here are the key takeaways from Applied Optoelectronics’ conference call:

• Record revenue and return to profitability: Q2 revenue reached $191.9 million, up 86% year over year, marking the fifth consecutive quarterly revenue record. Non-GAAP net income was $5.5 million, or $0.06 per diluted share, ahead of guidance.
• AI-related demand remains exceptionally strong: 800G revenue more than doubled sequentially to $12.8 million, while 400G revenue rose 27.4% sequentially to $48.4 million. Management said forecast demand for 800G and 1.6T products exceeds production capacity through mid-2027.
• Major capacity expansion and product ramps are underway: AOI expects 800G and 1.6T production capacity to rise from nearly 200,000 units per month currently to more than 650,000 by year-end 2026 and over 930,000 by year-end 2027. Initial 1.6T shipments are expected later this quarter, with a larger ramp in 2027.
• CATV business delivered broad-based growth: Record CATV revenue of $80.6 million increased 43.8% year over year, and management guided to $100 million-$110 million in Q3 revenue. Mediacom also selected AOI as its primary vendor for DOCSIS 4.0 upgrades.
• Execution and funding risks remain significant: Q3 100G revenue is expected to decline by $20 million-$25 million because of a customer’s switch and memory shortages, while DSP/TIA and other material constraints could limit the 1.6T ramp. AOI also reported $565.5 million of Q2 capital investments, expects higher second-half CapEx, and plans to use additional equity and debt financing.

Applied Optoelectronics Trading Down 3.4%

Shares of Applied Optoelectronics stock traded down $4.34 on Thursday, hitting $124.22. 15,005,061 shares of the company’s stock traded hands, compared to its average volume of 9,766,170. The firm’s 50-day moving average price is $137.79 and its two-hundred day moving average price is $118.02. The company has a debt-to-equity ratio of 0.18, a current ratio of 3.83 and a quick ratio of 3.03. The stock has a market capitalization of $9.97 billion, a PE ratio of -188.21 and a beta of 3.76. Applied Optoelectronics has a one year low of $18.50 and a one year high of $233.67.

Key Applied Optoelectronics News

Here are the key news stories impacting Applied Optoelectronics this week:

• Positive Sentiment: Second-quarter results exceeded expectations: AAOI reported adjusted EPS of $0.06, above the $0.02 consensus estimate, while revenue rose 86.3% year over year to $191.9 million, slightly ahead of forecasts. The company also improved from a $0.16 per-share loss in the year-ago quarter. Applied Optoelectronics Reports Second Quarter 2026 Results
• Positive Sentiment: Demand remains exceptionally strong: Management said demand is expected to exceed production capacity through mid-2027, supported by AI data-center deployments and rising demand for high-speed optical networking products. This suggests strong order visibility and potential pricing power, although capacity expansion is increasingly important. Applied Optoelectronics Q2 Demand Outlook
• Positive Sentiment: Potential U.S. restrictions on Chinese optical transceivers provide a tailwind: A possible ban could encourage U.S. data-center customers to source from domestic suppliers such as AAOI, strengthening the company’s strategic position in the AI infrastructure market. Potential U.S. Restrictions on Chinese Optical Transceivers
• Neutral Sentiment: Third-quarter revenue guidance was solid: Management forecast revenue of $255 million to $290 million, with the midpoint above analysts’ $265.7 million estimate. However, the range reflects continued uncertainty around production ramp timing and product mix.
• Negative Sentiment: Third-quarter EPS guidance disappointed: AAOI projected EPS of $0.11 to $0.26, below the $0.27 consensus at the midpoint and with the low end substantially below expectations. The cautious earnings outlook appears to be the main reason the stock moved lower despite the quarterly beat. AAOI Q2 2026 Earnings Call Transcript
• Negative Sentiment: Valuation and insider selling remain risks: AAOI continues to report negative net income, while insider Shu-Hua Yeh sold approximately $596,000 of stock under a pre-arranged Rule 10b5-1 plan. The sale was relatively small compared with his remaining stake but adds a modest cautionary signal. AAOI Insider Sale

Wall Street Analysts Forecast Growth

AAOI has been the topic of a number of recent analyst reports. Weiss Ratings reissued a “sell (d-)” rating on shares of Applied Optoelectronics in a research note on Tuesday, July 7th. Wall Street Zen downgraded shares of Applied Optoelectronics from a “hold” rating to a “sell” rating in a research report on Monday, April 13th. Needham & Company LLC decreased their price objective on shares of Applied Optoelectronics from $260.00 to $220.00 and set a “buy” rating on the stock in a report on Wednesday, July 22nd. Raymond James Financial restated an “outperform” rating on shares of Applied Optoelectronics in a research report on Wednesday, June 10th. Finally, Rosenblatt Securities reiterated a “buy” rating and set a $220.00 target price on shares of Applied Optoelectronics in a research report on Monday, June 22nd. Three equities research analysts have rated the stock with a Buy rating, two have issued a Hold rating and one has given a Sell rating to the company. Based on data from MarketBeat, Applied Optoelectronics currently has a consensus rating of “Hold” and an average price target of $141.80.

Insiders Place Their Bets

In related news, CEO Chih-Hsiang (Thompson) Lin sold 59,000 shares of Applied Optoelectronics stock in a transaction on Friday, June 12th. The stock was sold at an average price of $166.53, for a total transaction of $9,825,270.00. Following the completion of the sale, the chief executive officer directly owned 1,302,436 shares of the company’s stock, valued at $216,894,667.08. The trade was a 4.33% decrease in their ownership of the stock. The sale was disclosed in a document filed with the Securities & Exchange Commission, which is available at this link. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Also, Director Cynthia Delaney sold 56,575 shares of the company’s stock in a transaction dated Tuesday, May 26th. The shares were sold at an average price of $189.23, for a total value of $10,705,687.25. Following the completion of the sale, the director owned 59,647 shares of the company’s stock, valued at $11,287,001.81. This represents a 48.68% decrease in their position. The SEC filing for this sale provides additional information. Insiders sold 506,215 shares of company stock worth $87,409,447 over the last three months. Insiders own 3.80% of the company’s stock.

Hedge Funds Weigh In On Applied Optoelectronics

Hedge funds and other institutional investors have recently made changes to their positions in the company. Invesco Ltd. lifted its holdings in Applied Optoelectronics by 5,208.9% during the fourth quarter. Invesco Ltd. now owns 3,512,309 shares of the semiconductor company’s stock worth $122,439,000 after acquiring an additional 3,446,150 shares in the last quarter. XTX Topco Ltd raised its position in shares of Applied Optoelectronics by 167.6% during the fourth quarter. XTX Topco Ltd now owns 24,771 shares of the semiconductor company’s stock worth $864,000 after purchasing an additional 15,513 shares during the period. SummitTX Capital L.P. acquired a new stake in shares of Applied Optoelectronics during the fourth quarter worth about $254,000. Quadrature Capital Ltd bought a new position in shares of Applied Optoelectronics during the 4th quarter valued at about $1,453,000. Finally, Millennium Management LLC bought a new position in shares of Applied Optoelectronics during the 4th quarter valued at about $358,000. 61.70% of the stock is owned by institutional investors.

Applied Optoelectronics Company Profile

Applied Optoelectronics, Inc develops and manufactures high-speed fiber-optic networking products designed to support the growing bandwidth demands of data centers, telecommunications carriers and internet content providers. The company’s core offerings include pluggable optical transceiver modules, transponders and optical components that enable data transmission at rates ranging from 1G to 400G. These products are used to facilitate long-haul, metro and intra-data center connectivity, addressing the need for scalable, low-latency and energy-efficient solutions in modern network infrastructures.

The company’s product portfolio spans small-form factor pluggable modules such as SFP+, QSFP+ and QSFP28 units, as well as more advanced form factors like CFP2 and OSFP for ultra-high-speed applications.