Applied Optoelectronics (NASDAQ:AAOI) Shares Down 10.6% Following Weak Earnings

Key Points

• Shares fell about 10.6% after AAOI reported Q1 EPS of ($0.07) vs. a ($0.05) consensus and revenue of $151.1M vs. $157M expected, while Q2 guidance of -$0.03 to $0.03 disappointed investors and triggered the sell-off.
• Despite roughly 51% year‑over‑year revenue growth and management saying it won major hyperscale customer orders, the company still shows negative net margins and strained profitability.
• Insiders have sold heavily (314,333 shares worth about $29.3M over 90 days), analysts remain mixed with an average "Hold" rating and a consensus price target near $52.80, even as institutions own roughly 61.7% of the stock.

Applied Optoelectronics, Inc. (NASDAQ:AAOI - Get Free Report)'s share price was down 10.6% on Thursday following a weaker than expected earnings announcement. The company traded as low as $160.11 and last traded at $159.6530. Approximately 4,806,944 shares were traded during trading, a decline of 49% from the average daily volume of 9,338,883 shares. The stock had previously closed at $178.54.

The semiconductor company reported ($0.07) EPS for the quarter, missing analysts' consensus estimates of ($0.05) by ($0.02). The company had revenue of $151.14 million for the quarter, compared to analyst estimates of $156.98 million. Applied Optoelectronics had a negative net margin of 8.39% and a negative return on equity of 5.29%. Applied Optoelectronics has set its Q2 2026 guidance at -0.030-0.030 EPS.

Applied Optoelectronics News Summary

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

• Positive Sentiment: Q1 revenue rose sharply year-over-year (about +51%) and management said it has won major hyperscale customer orders — evidence of demand exposure to AI/data-center spending. Article Title
• Positive Sentiment: Balance-sheet metrics remain healthy (low debt-to-equity and solid current/quick ratios), which gives the company flexibility while it executes on larger customer orders. Press Release
• Neutral Sentiment: Company filed its official Q1 2026 results/press release detailing results and guidance (formal source for numbers). Press Release
• Neutral Sentiment: Brokerage consensus remains non-committal (average rating: Hold), so there’s no immediate analyst-driven buy-side support. Article Title
• Negative Sentiment: Earnings missed expectations: AAOI reported ($0.07) EPS vs. consensus ($0.05) loss and revenue of $151.1M vs. $157M expected, highlighting margin pressure despite revenue growth. Press Release
• Negative Sentiment: Q2 guidance disappointed: EPS guide of -$0.03 to $0.03 vs. consensus +$0.07 and revenue guide $180–198M vs. ~$194M consensus — the main driver cited for the sharp share decline. (Guidance disclosed with Q1 release.) Article Title
• Negative Sentiment: Market sentiment and sector rotation: optics names pulled back as the AI/optics trade cooled, prompting heavy volume selling in AAOI and peers. External competitive moves (e.g., Corning scaling photonics capacity backed by big hyperscale deals) add longer-term competitive pressure. Article Title Corning Article

Wall Street Analysts Forecast Growth

Several analysts have commented on AAOI shares. Rosenblatt Securities reiterated a "buy" rating and set a $50.00 target price on shares of Applied Optoelectronics in a research report on Thursday, February 19th. Wall Street Zen lowered shares of Applied Optoelectronics from a "hold" rating to a "sell" rating in a report on Monday, April 13th. Weiss Ratings reiterated a "sell (d-)" rating on shares of Applied Optoelectronics in a report on Wednesday, January 21st. B. Riley Financial upgraded shares of Applied Optoelectronics from a "sell" rating to a "neutral" rating and set a $54.00 target price on the stock in a report on Friday, February 27th. Finally, Northland Securities reiterated a "market perform" rating and issued a $55.00 target price on shares of Applied Optoelectronics in a report on Friday, February 27th. Three equities research analysts have rated the stock with a Buy rating, three have issued a Hold rating and one has given a Sell rating to the stock. Based on data from MarketBeat, Applied Optoelectronics currently has an average rating of "Hold" and a consensus price target of $52.80.

Insider Activity

In other news, insider David C. Kuo sold 29,000 shares of the business's stock in a transaction dated Thursday, March 19th. The shares were sold at an average price of $100.13, for a total transaction of $2,903,770.00. Following the transaction, the insider directly owned 82,663 shares in the company, valued at $8,277,046.19. The trade was a 25.97% decrease in their position. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which is available at this link. Also, insider Hung-Lun (Fred) Chang sold 36,400 shares of the business's stock in a transaction dated Monday, March 16th. The stock was sold at an average price of $100.25, for a total transaction of $3,649,100.00. Following the transaction, the insider owned 233,618 shares in the company, valued at $23,420,204.50. This represents a 13.48% decrease in their ownership of the stock. The disclosure for this sale is available in the SEC filing. Over the last ninety days, insiders sold 314,333 shares of company stock worth $29,262,106. 3.80% of the stock is currently owned by company insiders.

Institutional Trading of Applied Optoelectronics

Hedge funds and other institutional investors have recently modified their holdings of the stock. KBC Group NV acquired a new position in shares of Applied Optoelectronics in the 1st quarter valued at approximately $164,000. Swiss National Bank increased its stake in Applied Optoelectronics by 9.8% in the first quarter. Swiss National Bank now owns 128,300 shares of the semiconductor company's stock valued at $10,853,000 after acquiring an additional 11,500 shares during the last quarter. Jennison Associates LLC bought a new position in Applied Optoelectronics in the first quarter valued at approximately $435,000. Independent Financial Group LLC bought a new position in Applied Optoelectronics in the first quarter valued at approximately $646,000. Finally, Wealthfront Advisers LLC bought a new position in Applied Optoelectronics in the first quarter valued at approximately $394,000. Institutional investors own 61.70% of the company's stock.

Applied Optoelectronics Price Performance

The business's 50 day moving average is $117.54 and its 200-day moving average is $63.67. The firm has a market capitalization of $12.61 billion, a P/E ratio of -242.38 and a beta of 3.76. The company has a quick ratio of 1.91, a current ratio of 2.63 and a debt-to-equity ratio of 0.18.

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.

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