Applied Optoelectronics (NASDAQ:AAOI) Shares Gap Up Following Earnings Beat
by Danessa Lincoln · The Markets DailyApplied Optoelectronics, Inc. (NASDAQ:AAOI – Get Free Report) shares gapped up prior to trading on Friday after the company announced better than expected quarterly earnings. The stock had previously closed at $124.22, but opened at $142.48. Applied Optoelectronics shares last traded at $144.3280, with a volume of 7,319,787 shares traded.
The semiconductor company reported $0.06 EPS for the quarter, beating the consensus estimate of $0.02 by $0.04. Applied Optoelectronics had a negative net margin of 8.55% and a negative return on equity of 4.64%. 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 firm posted ($0.16) earnings per share. The firm’s revenue was up 86.3% on a year-over-year basis. Applied Optoelectronics has set its Q3 2026 guidance at 0.110-0.260 EPS.
Applied Optoelectronics News Roundup
Here are the key news stories impacting Applied Optoelectronics this week:
- Positive Sentiment: Q2 earnings and revenue beat expectations: AAOI reported adjusted earnings of $0.06 per share, above estimates ranging from $0.02 to $0.03, versus a $0.16 loss a year earlier. Revenue rose 86.3% year over year to $191.92 million, also exceeding consensus. Applied Optoelectronics Surpasses Q2 Earnings and Revenue Estimates
- Positive Sentiment: Strong demand outlook tied to AI networking: Management indicated that demand is expected to exceed production capacity through mid-2027, supporting expectations for continued growth in optical and HFC networking products used in AI infrastructure. Applied Optoelectronics Beats Q2 Estimates and Expects Demand to Outpace Capacity
- Positive Sentiment: Analyst maintains bullish stance: Rosenblatt Securities reaffirmed its “buy” rating and set a $220 price target, implying substantial upside from recent trading levels. Rosenblatt Securities Rating
- Positive Sentiment: Potential U.S. restrictions on imports of Chinese optical transceivers could benefit domestic and non-Chinese suppliers such as AAOI if implemented. Potential AI Optical Transceiver Restrictions
- Neutral Sentiment: AAOI granted inducement awards covering 1,048 shares to four new employees. The grants may help attract talent but create limited potential dilution. Applied Optoelectronics Announces Equity Grants
- Negative Sentiment: Q3 EPS outlook trails expectations: Management guided to earnings of $0.11–$0.26 per share, below the $0.27 consensus estimate. Revenue guidance of $255 million–$290 million brackets the $265.7 million consensus, indicating continued growth but potential margin pressure.
Analyst Upgrades and Downgrades
Several equities research analysts recently commented on the stock. Wall Street Zen lowered shares of Applied Optoelectronics from a “hold” rating to a “sell” rating in a research note on Monday, April 13th. Raymond James Financial reaffirmed an “outperform” rating on shares of Applied Optoelectronics in a report on Wednesday, June 10th. Weiss Ratings reiterated a “sell (d-)” rating on shares of Applied Optoelectronics in a research report on Tuesday, July 7th. Needham & Company LLC reduced their target price on Applied Optoelectronics from $220.00 to $190.00 and set a “buy” rating for the company in a report on Friday. Finally, B. Riley Financial restated a “neutral” rating on shares of Applied Optoelectronics in a research note on Friday. Three 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. According to data from MarketBeat, Applied Optoelectronics currently has a consensus rating of “Hold” and a consensus target price of $135.80.
Read Our Latest Analysis on Applied Optoelectronics
Insider Activity
In other Applied Optoelectronics news, insider Hung-Lun (Fred) Chang sold 40,329 shares of the firm’s stock in a transaction on Wednesday, June 17th. The shares were sold at an average price of $170.60, for a total transaction of $6,880,127.40. Following the transaction, the insider directly owned 286,124 shares of the company’s stock, valued at approximately $48,812,754.40. This trade represents a 12.35% decrease in their position. The sale was disclosed in a document filed with the SEC, which is available at the SEC website. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, insider David C. Kuo sold 29,227 shares of Applied Optoelectronics stock in a transaction on Friday, June 12th. The shares were sold at an average price of $166.53, for a total transaction of $4,867,172.31. Following the completion of the transaction, the insider owned 149,078 shares in the company, valued at approximately $24,825,959.34. This represents a 16.39% decrease in their ownership of the stock. Additional details regarding this sale are available in the official SEC disclosure. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Insiders have sold 506,215 shares of company stock worth $87,409,447 over the last 90 days. 3.80% of the stock is owned by corporate insiders.
Hedge Funds Weigh In On Applied Optoelectronics
Several institutional investors have recently added to or reduced their stakes in AAOI. Greenwoods Asset Management Hong Kong Ltd. purchased a new stake in Applied Optoelectronics during the 2nd quarter valued at approximately $7,930,000. Mitsubishi UFJ Asset Management Co. Ltd. purchased a new position in shares of Applied Optoelectronics in the 2nd quarter valued at approximately $1,401,000. Persistent Asset Partners Ltd acquired a new position in shares of Applied Optoelectronics in the second quarter valued at approximately $47,000. Simplicity Wealth LLC acquired a new position in shares of Applied Optoelectronics in the second quarter valued at approximately $227,000. Finally, Global Retirement Partners LLC purchased a new stake in shares of Applied Optoelectronics during the second quarter worth approximately $99,000. Institutional investors and hedge funds own 61.70% of the company’s stock.
Applied Optoelectronics Price Performance
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 company has a 50 day moving average price of $137.79 and a 200 day moving average price of $118.02. The firm has a market cap of $11.61 billion, a PE ratio of -215.43 and a beta of 3.76.
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.