Applied Optoelectronics (NASDAQ:AAOI) Issues Quarterly Earnings Results, Beats Estimates By $0.03 EPS

Applied Optoelectronics (NASDAQ:AAOI) posted its quarterly earnings results on Thursday. The semiconductor company reported $0.17 earnings per share for the quarter, beating the consensus estimate of $0.14 by $0.03, FiscalAI reports. The company 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 firm’s revenue for the quarter was up 127.5% on a year-over-year basis. During the same quarter in the prior year, the business earned ($0.09) earnings per share.

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

• AOI reported record Q3 revenue of $269.9 million, up 127.5% year over year, and returned to GAAP profitability. Non-GAAP EPS was $0.17, within guidance, though gross margin of 28.7% came in slightly below expectations.
• A new three-year agreement with an existing hyperscale customer covers 1.6-terabit transceivers and could generate an estimated $1 billion to $1.5 billion from June 2026 through May 2029. The customer committed to purchase at least 10% of its requirements, subject to conditions; AOI agreed to pricing that includes reductions over the term, and the customer made no capital commitment.
• AOI expects strong demand to outstrip production capacity, with a faster-than-expected shift from 800G to 1.6T orders and limited materials constraining Q4 shipments. Phase 2 facility expansion is delayed by several months, pushing the targeted $471 million monthly revenue run rate to toward the end of 2027.
• Management forecast Q4 revenue of $385 million to $420 million and non-GAAP EPS of $0.48 to $0.63, while CATV revenue reached a record $110.9 million in Q3 and is expected to rise to $105 million to $115 million in Q4.
• AOI completed a $600 million at-the-market equity offering and expects to fund expansion with a mix of cash, operating cash flow, debt, and potential equity issuance. The Q4 diluted share-count assumption rises to approximately 96 million, from 87.8 million in Q3.

Applied Optoelectronics Stock Performance

Shares of AAOI traded down $12.38 during trading hours on Thursday, hitting $46.89. The company’s stock had a trading volume of 28,505,936 shares, compared to its average volume of 12,841,640. The company has a market cap of $3.97 billion, a price-to-earnings ratio of -60.12 and a beta of 4.04. The company has a debt-to-equity ratio of 0.12, a current ratio of 2.78 and a quick ratio of 2.13. The business has a 50 day simple moving average of $94.22 and a two-hundred day simple moving average of $113.19. Applied Optoelectronics has a 52-week low of $18.50 and a 52-week high of $233.67.

Analyst Upgrades and Downgrades

Several brokerages have recently issued reports on AAOI. Northland Securities upgraded shares of Applied Optoelectronics from a “market perform” rating to an “outperform” rating and set a $120.00 price target for the company in a research note on Monday. Rosenblatt Securities reiterated a “buy” rating and issued a $220.00 price objective on shares of Applied Optoelectronics in a research note on Friday, August 7th. Raymond James Financial reissued an “outperform” rating and set a $178.00 price objective on shares of Applied Optoelectronics in a report on Tuesday, August 11th. B. Riley Financial decreased their target price on Applied Optoelectronics from $109.00 to $92.00 and set a “neutral” rating for the company in a research report on Thursday, October 15th. Finally, Needham & Company LLC decreased their target price on Applied Optoelectronics from $190.00 to $170.00 and set a “buy” rating for the company in a research report on Tuesday, October 27th. Four investment analysts have rated the stock with a Buy rating, one has issued a Hold rating and one has assigned a Sell rating to the company’s stock. According to data from MarketBeat.com, Applied Optoelectronics presently has a consensus rating of “Moderate Buy” and a consensus target price of $156.00.

Insider Activity

In related news, CFO Stefan J. Murry sold 4,000 shares of Applied Optoelectronics stock in a transaction that occurred on Monday, October 12th. The shares were sold at an average price of $102.87, for a total value of $411,480.00. Following the completion of the transaction, the chief financial officer directly owned 363,168 shares in the company, valued at approximately $37,359,092.16. The trade was a 1.09% decrease in their position. The transaction was disclosed in a filing with the Securities & Exchange Commission, which is accessible through this hyperlink. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, insider Hung-Lun Chang sold 32,172 shares of the business’s stock in a transaction on Tuesday, September 8th. The shares were sold at an average price of $110.21, for a total transaction of $3,545,676.12. Following the sale, the insider directly owned 249,276 shares in the company, valued at $27,472,707.96. The trade was a 11.43% decrease in their position. The SEC filing for this sale provides additional information. Insiders have sold a total of 52,172 shares of company stock valued at $5,985,036 over the last quarter. Company insiders own 3.80% of the company’s stock.

Applied Optoelectronics News Summary

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

• Positive Sentiment: AAOI earned $0.17 per share, above the $0.14 consensus estimate, and revenue of $269.88 million also topped expectations. Revenue rose 127.5% year over year; the company said it posted record revenue for a sixth consecutive quarter and returned to GAAP profitability. Applied Optoelectronics Reports Third Quarter 2026 Results
• Positive Sentiment: Northland Securities had recently raised its rating on AAOI to Outperform, with a report citing substantial potential upside. Northland sees upside for Applied Optoelectronics
• Negative Sentiment: AAOI fell sharply as investors sold AI optical stocks for a second straight session, despite strong results across the group. Coverage linked the pressure to the market’s reaction following Coherent’s earnings and weakness across optical peers, suggesting sector-wide sentiment outweighed AAOI’s earnings beat. AI optical stocks slide

About Applied Optoelectronics

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.