Applied Optoelectronics (NASDAQ:AAOI) Posts Quarterly Earnings Results, Misses Expectations By $0.02 EPS

Key Points

• Applied Optoelectronics missed Q1 EPS at -$0.07 vs. the -$0.05 consensus and reported revenue of $151.1M (vs. $157.0M), though revenue was up 51% YoY; the company nonetheless raised full‑year 2026 revenue guidance to >$1.1B and expects ~$140M in non‑GAAP operating income.
• Management highlighted product wins and volume ramps — first volume shipments of 800G transceivers and a first volume order for 1.6T — and is scaling capacity from ~100k units/month to a target of ~650k/month by year‑end, aiming for ~35% non‑GAAP gross margins by year‑end and ~40% longer‑term.
• Investors reacted negatively (shares fell about $21 intraday to $157.55), with near‑term risks including weak Q2 guidance (EPS -$0.03 to $0.03; revenue $180M–$198M), high customer concentration (top 10 = 98%, one customer = 44%), insider selling and supply‑chain/tariff uncertainties.

Applied Optoelectronics (NASDAQ:AAOI - Get Free Report) released its quarterly earnings results on Thursday. The semiconductor company reported ($0.07) EPS for the quarter, missing the consensus estimate of ($0.05) by ($0.02), FiscalAI reports. Applied Optoelectronics had a negative net margin of 8.39% and a negative return on equity of 5.29%. The business had revenue of $151.14 million for the quarter, compared to analysts' expectations of $156.98 million. During the same period in the previous year, the company earned ($0.02) EPS. Applied Optoelectronics's revenue for the quarter was up 51.3% compared to the same quarter last year. Applied Optoelectronics updated its Q2 2026 guidance to -0.030-0.030 EPS.

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

• AOI reported a record quarter with $151.1M revenue (up 51% YoY), raised 2026 revenue guidance to >$1.1B, and expects >$140M in non‑GAAP operating income for the year.
• Management highlighted accelerating customer demand and product wins for high‑speed modules — including the first volume shipment of 800G transceivers and a first volume order for 1.6T — with a strong ramp expected starting Q2 and a larger ramp in Q3.
• AOI is aggressively expanding manufacturing (new Texas buildings plus global sites) and reported exiting Q1 ~100k 800G/1.6T units/month capacity, targeting ~150k this quarter and ~650k/month by year‑end, funded by cash, operations, equity and debt.
• Margins and profitability are a focus: Q1 non‑GAAP gross margin was 29.2%, company expects ~29–30% in Q2, targets ~35% by year‑end and ~40% longer‑term, and forecasts approaching sustained non‑GAAP profitability this year.
• Key risks include supply chain and execution (indium phosphide/laser capacity is critical despite in‑house production), a recent $1.4M tariff hit with a refund timing uncertainty (~$5.7M expected), and high customer concentration (top 10 = 98%, one CATV customer = 44% of revenue).

Applied Optoelectronics Stock Performance

Applied Optoelectronics stock traded down $20.99 during midday trading on Thursday, hitting $157.55. The stock had a trading volume of 14,113,055 shares, compared to its average volume of 10,705,332. The firm's fifty day moving average is $119.57 and its two-hundred day moving average is $64.55. The company has a market capitalization of $12.61 billion, a PE ratio of -242.38 and a beta of 3.76. Applied Optoelectronics has a 52-week low of $12.56 and a 52-week high of $191.87. The company has a current ratio of 2.63, a quick ratio of 1.91 and a debt-to-equity ratio of 0.18.

Insider Buying and Selling

In related news, insider Hung-Lun (Fred) Chang sold 36,400 shares of the stock in a transaction that occurred on Monday, March 16th. The shares were sold at an average price of $100.25, for a total value of $3,649,100.00. Following the completion of the sale, the insider directly owned 233,618 shares of the company's stock, valued at approximately $23,420,204.50. This represents a 13.48% decrease in their position. The transaction was disclosed in a legal filing with the SEC, which can be accessed through this link. Also, Director William H. Yeh sold 15,000 shares of the stock in a transaction that occurred on Monday, March 9th. The stock was sold at an average price of $105.76, for a total transaction of $1,586,400.00. Following the completion of the sale, the director directly owned 238,819 shares of the company's stock, valued at $25,257,497.44. This represents a 5.91% decrease in their ownership of the stock. Additional details regarding this sale are available in the official SEC disclosure. Insiders sold a total of 314,333 shares of company stock worth $29,262,106 in the last ninety days. Corporate insiders own 3.80% of the company's stock.

Institutional Investors Weigh In On Applied Optoelectronics

A number of institutional investors have recently added to or reduced their stakes in AAOI. Comerica Bank purchased a new stake in Applied Optoelectronics during the 3rd quarter valued at approximately $28,000. Northwestern Mutual Wealth Management Co. grew its holdings in Applied Optoelectronics by 166.7% during the 4th quarter. Northwestern Mutual Wealth Management Co. now owns 1,200 shares of the semiconductor company's stock valued at $42,000 after buying an additional 750 shares in the last quarter. Headlands Technologies LLC purchased a new stake in Applied Optoelectronics during the 2nd quarter valued at approximately $57,000. Wexford Capital LP purchased a new stake in Applied Optoelectronics during the 3rd quarter valued at approximately $95,000. Finally, State of Wyoming purchased a new stake in Applied Optoelectronics during the 4th quarter valued at approximately $160,000. 61.70% of the stock is owned by hedge funds and other institutional investors.

Analyst Upgrades and Downgrades

AAOI has been the subject of several research reports. Needham & Company LLC upped their price target on shares of Applied Optoelectronics from $43.00 to $80.00 and gave the company a "buy" rating in a research report on Friday, February 27th. Weiss Ratings reaffirmed a "sell (d-)" rating on shares of Applied Optoelectronics in a research report on Wednesday, January 21st. Rosenblatt Securities reaffirmed a "buy" rating and set a $50.00 price target on shares of Applied Optoelectronics in a research report on Thursday, February 19th. Northland Securities reaffirmed a "market perform" rating and set a $55.00 price target on shares of Applied Optoelectronics in a research report on Friday, February 27th. Finally, Wall Street Zen lowered shares of Applied Optoelectronics from a "hold" rating to a "sell" rating in a report on Monday, April 13th. Three equities research analysts have rated the stock with a Buy rating, three have given a Hold rating and one has assigned a Sell rating to the company. Based on data from MarketBeat.com, Applied Optoelectronics currently has an average rating of "Hold" and an average price target of $52.80.

Key Stories Impacting Applied Optoelectronics

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

• Positive Sentiment: Company reports wins with hyperscale customers mentioned in a portfolio review, which could support longer-term revenue if those orders scale. Carillon Eagle Fund Q1 2026 Portfolio Review
• Neutral Sentiment: Company filed an official press release with full Q1 results and commentary; use this for company-provided detail on results and order commentary. GlobeNewswire: Q1 2026 Results
• Neutral Sentiment: Brokerage consensus remains around a "Hold" rating, indicating mixed analyst sentiment despite the recent volatility. Brokerage Ratings Summary
• Negative Sentiment: Q1 results missed expectations: EPS of -$0.07 (vs. consensus -$0.05) and revenue $151.14M (vs. $156.98M), with negative net margin and ROE — a clear near-term fundamental miss. Company Press Release / Q1 Report
• Negative Sentiment: Q2 guidance underwhelms: EPS guidance of -$0.03 to $0.03 and revenue $180M–$198M both come in below consensus (EPS ~ $0.07; revenue ~$194.1M), prompting investor concern over near-term demand and margin recovery.
• Negative Sentiment: Market reaction and sector tilt: the optics/AI connectivity trade cooled and AAOI shares sold off in intraday trading alongside peers, reflecting rotation and concern about whether smaller optics suppliers will capture large hyperscale spending. Optics Trade Pullback Coverage
• Negative Sentiment: Competitive pressure from large suppliers: coverage on Corning’s large-capacity, hyperscale agreements and NVIDIA-backed expansion highlights a risk that bigger, contract-backed suppliers could win long-term, high-volume deals at the expense of peers like AAOI. Corning/NVIDIA Optical Capacity Article

About Applied Optoelectronics

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.

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