Applied Optoelectronics (NASDAQ:AAOI) Stock Jumps 6.9% on Better-Than-Expected Earnings

Key Points

• AAOI shares rose 6.9% after quarterly earnings beat expectations: EPS was $0.17 versus $0.14 forecast, while revenue of $269.9 million edged past estimates.
• Revenue surged 127.5% year over year, supported by datacenter and CATV sales; management also cited strong demand for 800G products and growing interest in 1.6T transceivers.
• The outlook carries risks: fourth-quarter revenue guidance of $385 million–$420 million was below analysts’ $427.3 million consensus, and component shortages and manufacturing capacity delays could constrain growth.

Applied Optoelectronics, Inc. (NASDAQ:AAOI - Get Free Report)'s share price shot up 6.9% during mid-day trading on Friday after the company announced better than expected quarterly earnings. The stock traded as high as $51.90 and last traded at $50.13. 21,624,004 shares traded hands during mid-day trading, an increase of 104% from the average session volume of 10,623,257 shares. The stock had previously closed at $46.89.

The semiconductor company reported $0.17 earnings per share (EPS) for the quarter, beating the consensus estimate of $0.14 by $0.03. The business had revenue of $269.88 million during the quarter, compared to analyst estimates of $268.11 million. Applied Optoelectronics had a negative net margin of 9.57% and a negative return on equity of 1.98%. The company's revenue was up 127.5% on a year-over-year basis. During the same period in the prior year, the business posted ($0.09) earnings per share.

Applied Optoelectronics News Roundup

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

• Positive Sentiment: AAOI reported Q3 EPS of $0.17, topping the $0.14 estimate, and revenue of $269.9 million, slightly above expectations and up 127.5% year over year. The company also returned to GAAP profitability, with datacenter and CATV sales supporting results. Applied Optoelectronics Reports Third Quarter 2026 Results
• Positive Sentiment: Demand for 800G products is strong, and management cited accelerating interest in 1.6T transceivers and a potential $1 billion–$1.5 billion hyperscaler opportunity. The broader AI optical-stock group also rallied, helping lift sentiment. AAOI Q3 Earnings Call Highlights
• Positive Sentiment: Rosenblatt maintained a Buy rating while lowering its price target to $115, still well above the price cited in the report. Rosenblatt Securities recommendations
• Neutral Sentiment: The share move also reflects a broader rebound in AI optical names after recent selling, rather than company-specific news alone. AI optical stocks rebound
• Negative Sentiment: Q4 revenue guidance of $385 million–$420 million came in below the $427.3 million consensus estimate, tempering the strong quarterly report. AAOI Q3 earnings and sales
• Negative Sentiment: Component shortages and delays expanding manufacturing capacity—including power and construction issues at planned U.S. facilities—could limit the company’s ability to meet demand. B. Riley also cut its target to $45 and moved to Neutral. AOI earnings reaction and manufacturing capacity

Wall Street Analyst Weigh In

Several equities analysts recently issued reports on AAOI shares. Rosenblatt Securities reduced their price target on Applied Optoelectronics from $220.00 to $115.00 and set a "buy" rating on the stock in a research report on Friday. B. Riley Financial lowered their price objective on Applied Optoelectronics from $92.00 to $45.00 and set a "neutral" rating for the company in a research report on Friday. Needham & Company LLC lowered their price objective on Applied Optoelectronics from $170.00 to $100.00 and set a "buy" rating for the company in a research report on Friday. Wall Street Zen raised Applied Optoelectronics from a "sell" rating to a "hold" rating in a research note on Saturday, August 8th. Finally, Raymond James Financial restated an "outperform" rating and issued a $178.00 target price on shares of Applied Optoelectronics in a report on Tuesday, August 11th. Four equities research analysts have rated the stock with a Buy rating, one has issued a Hold rating and one has assigned a Sell rating to the stock. According to data from MarketBeat, the stock currently has an average rating of "Moderate Buy" and a consensus target price of $111.60.

Insider Transactions at Applied Optoelectronics

In related news, insider Hung-Lun Chang sold 32,172 shares of the business's stock in a transaction dated Tuesday, September 8th. The stock was sold at an average price of $110.21, for a total transaction of $3,545,676.12. Following the transaction, the insider owned 249,276 shares in the company, valued at $27,472,707.96. The trade was a 11.43% decrease in their position. The sale was disclosed in a document filed with the Securities & Exchange Commission, which is available at this link. Also, insider Shu-Hua Yeh sold 6,000 shares of the business's stock in a transaction dated Monday, October 5th. The shares were sold at an average price of $120.03, for a total value of $720,180.00. Following the transaction, the insider owned 371,498 shares in the company, valued at approximately $44,590,904.94. This represents a 1.59% decrease in their position. Additional details regarding this sale are available in the official SEC disclosure. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Over the last ninety days, insiders sold 52,172 shares of company stock worth $5,985,036. Company insiders own 3.80% of the company's stock.

Hedge Funds Weigh In On Applied Optoelectronics

Several hedge funds have recently made changes to their positions in AAOI. Ritholtz Wealth Management bought a new position in shares of Applied Optoelectronics during the third quarter valued at $476,000. Jacobi Capital Management LLC bought a new position in Applied Optoelectronics in the 3rd quarter worth about $33,000. Knights of Columbus Asset Advisors LLC boosted its stake in Applied Optoelectronics by 1.1% in the 3rd quarter. Knights of Columbus Asset Advisors LLC now owns 20,427 shares of the semiconductor company's stock worth $2,028,000 after purchasing an additional 221 shares in the last quarter. Matthews International Capital Management LLC bought a new position in Applied Optoelectronics in the 3rd quarter worth about $8,927,000. Finally, AlphaCore Capital LLC boosted its stake in Applied Optoelectronics by 125.6% in the 3rd quarter. AlphaCore Capital LLC now owns 4,077 shares of the semiconductor company's stock worth $405,000 after purchasing an additional 2,270 shares in the last quarter. 61.70% of the stock is owned by hedge funds and other institutional investors.

Applied Optoelectronics Stock Up 6.9%

The company's 50-day moving average is $94.22 and its 200 day moving average is $113.19. The company has a market capitalization of $4.24 billion, a PE ratio of -64.27 and a beta of 4.04. The company has a debt-to-equity ratio of 0.12, a quick ratio of 2.13 and a current ratio of 2.78.

Applied Optoelectronics Company Profile

Applied Optoelectronics, Inc NASDAQ: AAOI develops and manufactures fiber-optic networking products and solutions. Its offerings include optical transceivers, transmitters, receivers, lasers, and related components used to transmit data across fiber-optic networks.

The company serves several communications markets, including data centers, broadband access networks, cable television, and telecommunications. Its products are designed for applications such as high-speed data transmission, fiber-to-the-home and other broadband deployments, network connectivity, and communications infrastructure.

Founded in 1997 and headquartered in Sugar Land, Texas, Applied Optoelectronics supports customers in multiple regions, including North America, Asia, and other international markets.

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