Applied Optoelectronics (NASDAQ:AAOI) Shares Down 4.6% - Should You Sell?

Key Points

• Shares fell about 4.6% to $89.72 on Tuesday with volume below average; the company has a market cap of $6.49 billion, a negative PE and a high beta (3.19).
• Applied Optoelectronics beat Q4 estimates with EPS of ($0.01) vs. ($0.12) expected and revenue of $134.27M (+33.9% YoY), but guided Q1 2026 EPS to -0.090–0.000 and faces an FY EPS consensus of -1.18.
• Analyst coverage is mixed (3 Buy / 3 Hold / 1 Sell) with an average target of $52.80—well below the current price—while insiders have sold sizable stakes recently even as major institutions materially increased holdings.

Shares of Applied Optoelectronics, Inc. (NASDAQ:AAOI - Get Free Report) traded down 4.6% during trading on Tuesday . The stock traded as low as $87.80 and last traded at $89.7220. 4,570,150 shares were traded during trading, a decline of 39% from the average session volume of 7,474,689 shares. The stock had previously closed at $94.07.

Analyst Upgrades and Downgrades

Several brokerages recently weighed in on AAOI. Weiss Ratings reiterated a "sell (d-)" rating on shares of Applied Optoelectronics in a research report on Wednesday, January 21st. B. Riley Financial upgraded Applied Optoelectronics from a "sell" rating to a "neutral" rating and set a $54.00 target price on the stock in a research report on Friday, February 27th. Rosenblatt Securities reiterated a "buy" rating and set a $50.00 price target on shares of Applied Optoelectronics in a report on Thursday, February 19th. Needham & Company LLC raised their price objective on Applied Optoelectronics from $43.00 to $80.00 and gave the stock a "buy" rating in a research report on Friday, February 27th. Finally, Wall Street Zen upgraded shares of Applied Optoelectronics from a "sell" rating to a "hold" rating in a report on Saturday, February 28th. Three equities research analysts have rated the stock with a Buy rating, three have assigned a Hold rating and one has issued a Sell rating to the company's stock. Based on data from MarketBeat.com, Applied Optoelectronics currently has an average rating of "Hold" and an average target price of $52.80.

Applied Optoelectronics Trading Down 8.3%

The company has a market cap of $6.49 billion, a PE ratio of -132.64 and a beta of 3.19. The company has a quick ratio of 1.91, a current ratio of 2.63 and a debt-to-equity ratio of 0.18. The business has a 50-day simple moving average of $56.83 and a 200-day simple moving average of $38.98.

Applied Optoelectronics (NASDAQ:AAOI - Get Free Report) last released its quarterly earnings results on Thursday, February 26th. The semiconductor company reported ($0.01) EPS for the quarter, topping the consensus estimate of ($0.12) by $0.11. The business had revenue of $134.27 million during the quarter, compared to analyst estimates of $131.56 million. Applied Optoelectronics had a negative return on equity of 5.29% and a negative net margin of 8.39%.The company's quarterly revenue was up 33.9% on a year-over-year basis. During the same period last year, the business posted ($0.02) earnings per share. Applied Optoelectronics has set its Q1 2026 guidance at -0.090-0.000 EPS. On average, analysts predict that Applied Optoelectronics, Inc. will post -1.18 EPS for the current fiscal year.

Insider Buying and Selling

In related news, insider Shu-Hua (Joshua) Yeh sold 50,000 shares of the company's stock in a transaction that occurred on Monday, March 9th. The shares were sold at an average price of $97.10, for a total transaction of $4,855,000.00. Following the sale, the insider directly owned 322,051 shares of the company's stock, valued at $31,271,152.10. This represents a 13.44% decrease in their position. The sale was disclosed in a filing with the Securities & Exchange Commission, which is accessible through this hyperlink. 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 sale, the director owned 238,819 shares in the company, valued at approximately $25,257,497.44. This trade 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 273,433 shares of company stock worth $23,341,962 over the last 90 days. 4.50% of the stock is owned by insiders.

Hedge Funds Weigh In On Applied Optoelectronics

Institutional investors have recently modified their holdings of the business. Vanguard Group Inc. raised its stake in shares of Applied Optoelectronics by 7.7% in the fourth quarter. Vanguard Group Inc. now owns 4,982,660 shares of the semiconductor company's stock valued at $173,696,000 after acquiring an additional 358,090 shares in the last quarter. Invesco Ltd. grew its stake in Applied Optoelectronics by 5,208.9% during the 4th quarter. Invesco Ltd. now owns 3,512,309 shares of the semiconductor company's stock worth $122,439,000 after purchasing an additional 3,446,150 shares in the last quarter. Price T Rowe Associates Inc. MD grew its stake in Applied Optoelectronics by 5,321.6% during the 4th quarter. Price T Rowe Associates Inc. MD now owns 2,229,757 shares of the semiconductor company's stock worth $77,730,000 after purchasing an additional 2,188,630 shares in the last quarter. Hawk Ridge Capital Management LP increased its holdings in Applied Optoelectronics by 106.2% during the 4th quarter. Hawk Ridge Capital Management LP now owns 1,700,900 shares of the semiconductor company's stock worth $59,293,000 after purchasing an additional 875,903 shares during the period. Finally, Morgan Stanley increased its holdings in Applied Optoelectronics by 157.1% during the 4th quarter. Morgan Stanley now owns 1,699,855 shares of the semiconductor company's stock worth $59,257,000 after purchasing an additional 1,038,775 shares during the period. Institutional investors and hedge funds own 61.70% of the company's stock.

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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