Applied Optoelectronics (NASDAQ:AAOI) Shares Gap Down – Should You Sell?

Applied Optoelectronics, Inc. (NASDAQ:AAOI)’s share price gapped down prior to trading on Thursday . The stock had previously closed at $45.23, but opened at $42.93. Applied Optoelectronics shares last traded at $37.92, with a volume of 4,126,937 shares changing hands.

Applied Optoelectronics News Roundup

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

• Positive Sentiment: 800G product wins and Texas capacity build — Company announcements and reporting indicate AAOI has secured 800G orders tied to AI/datacenter customers and is scaling manufacturing in Texas to meet that demand; investors are treating this as a structural demand catalyst for higher‑margin, next‑generation optics. Applied Optoelectronics Secures 800G Order And Scales Texas For AI Demand
• Positive Sentiment: Analyst/upbeat outlook and buy recommendations — Recent coverage from retail and independent outlets highlighted an upbeat outlook and fresh buy recommendations after the company’s disclosures, supporting momentum as investors re-rate growth prospects tied to AI networking spend. Applied Optoelectronics (AAOI) Hits Nearly 8-Year High on Upbeat Outlook, Buy Reco
• Positive Sentiment: Technical breakout narrative — Independent commentary argues AAOI has cleared multi‑year moving averages (50‑ and 200‑week), signaling a structural breakout that attracted momentum buying from traders and some longer‑term investors. Applied Optoelectronics’ Breakout Is Just Beginning
• Neutral Sentiment: Coverage pieces explaining the rally — Several market writeups summarized why the stock jumped (800G wins, expansion, upgrade momentum), which amplified retail interest but doesn’t add new corporate fundamentals by itself. Why Applied Optoelectronics, Inc.’s (AAOI) Stock Is Up 17.97%
• Neutral Sentiment: Mixed signals on sustainability of the move — Zacks and other analysts note that while revenue upside and product wins are supportive, recent earnings‑estimate revisions and the company’s negative trailing margins mean the rally could be sentiment‑driven and may not yet be reflected in durable EPS improvements. Zacks Investment Ideas feature highlights: Applied Optoelectronics,Amazon, Oracle and Microsoft
• Negative Sentiment: Profit‑taking and volatility — After the run of gains and an 8‑year high, the stock experienced a sharp pullback on heavy volume as some investors took profits; expect continued intraday swings while the market digests whether 800G orders and capital expansion will translate into margin recovery and sustained earnings. Applied Optoelectronics (AAOI) falls 12.5% after 8-year high
• Neutral Sentiment: Short interest data uninformative — Recent short‑interest reporting showed anomalous/zero values and doesn’t provide a clear signal on positioning; monitor updated, reliable filings for true short‑squeeze risk. Short interest report (Jan 28)

Wall Street Analyst Weigh In

Several analysts recently issued reports on AAOI shares. Needham & Company LLC boosted their price target on Applied Optoelectronics from $38.00 to $43.00 and gave the company a “buy” rating in a research note on Thursday, December 11th. B. Riley reissued a “sell” rating and set a $15.00 target price on shares of Applied Optoelectronics in a report on Monday, November 10th. Rosenblatt Securities restated a “buy” rating and issued a $50.00 price target on shares of Applied Optoelectronics in a research note on Friday, December 19th. Northland Securities set a $45.00 price target on shares of Applied Optoelectronics in a research report on Thursday, December 11th. Finally, Weiss Ratings reissued a “sell (d-)” rating on shares of Applied Optoelectronics in a report on Wednesday, January 21st. Four investment analysts have rated the stock with a Buy rating, one has issued a Hold rating and two have assigned a Sell rating to the company’s stock. Based on data from MarketBeat, the stock has a consensus rating of “Hold” and a consensus target price of $35.60.

Applied Optoelectronics Price Performance

The business’s 50-day simple moving average is $33.75 and its two-hundred day simple moving average is $29.23. The stock has a market cap of $2.98 billion, a price-to-earnings ratio of -13.54 and a beta of 3.26. The company has a debt-to-equity ratio of 0.23, a current ratio of 2.31 and a quick ratio of 1.63.

Applied Optoelectronics (NASDAQ:AAOI) last released its quarterly earnings data on Thursday, November 6th. The semiconductor company reported ($0.09) earnings per share (EPS) for the quarter, beating the consensus estimate of ($0.10) by $0.01. Applied Optoelectronics had a negative return on equity of 7.34% and a negative net margin of 36.97%.The company had revenue of $118.63 million during the quarter, compared to the consensus estimate of $119.77 million. During the same quarter in the prior year, the firm posted ($0.21) earnings per share. The firm’s revenue was up 82.1% compared to the same quarter last year. Applied Optoelectronics has set its Q4 2025 guidance at -0.130–0.040 EPS. Research analysts expect that Applied Optoelectronics, Inc. will post -1.18 earnings per share for the current year.

Insider Buying and Selling at Applied Optoelectronics

In other Applied Optoelectronics news, CFO Stefan J. Murry sold 3,000 shares of the company’s stock in a transaction dated Monday, January 12th. The shares were sold at an average price of $33.75, for a total value of $101,250.00. Following the completion of the sale, the chief financial officer directly owned 283,971 shares of the company’s stock, valued at approximately $9,584,021.25. This represents a 1.05% decrease in their position. The sale was disclosed in a document filed with the SEC, which is accessible through the SEC website. Also, insider David C. Kuo sold 12,500 shares of the firm’s stock in a transaction that occurred on Tuesday, December 23rd. The stock was sold at an average price of $40.15, for a total transaction of $501,875.00. Following the sale, the insider owned 130,948 shares of the company’s stock, valued at approximately $5,257,562.20. The trade was a 8.71% decrease in their position. The disclosure for this sale is available in the SEC filing. Over the last three months, insiders have sold 28,500 shares of company stock worth $1,178,726. 4.50% of the stock is owned by insiders.

Institutional Trading of Applied Optoelectronics

Institutional investors and hedge funds have recently bought and sold shares of the company. Comerica Bank lifted its holdings in shares of Applied Optoelectronics by 27.6% in the 4th quarter. Comerica Bank now owns 1,386 shares of the semiconductor company’s stock worth $48,000 after acquiring an additional 300 shares during the last quarter. AlphaQuest LLC raised its holdings in Applied Optoelectronics by 7.9% in the third quarter. AlphaQuest LLC now owns 7,503 shares of the semiconductor company’s stock worth $195,000 after purchasing an additional 551 shares in the last quarter. Arizona State Retirement System grew its stake in shares of Applied Optoelectronics by 4.9% in the 4th quarter. Arizona State Retirement System now owns 16,519 shares of the semiconductor company’s stock worth $576,000 after buying an additional 769 shares during the last quarter. Nisa Investment Advisors LLC grew its position in Applied Optoelectronics by 497.5% during the 2nd quarter. Nisa Investment Advisors LLC now owns 962 shares of the semiconductor company’s stock valued at $25,000 after purchasing an additional 801 shares during the last quarter. Finally, GAMMA Investing LLC lifted its holdings in shares of Applied Optoelectronics by 85.9% during the second quarter. GAMMA Investing LLC now owns 1,785 shares of the semiconductor company’s stock valued at $46,000 after purchasing an additional 825 shares in the last quarter. 61.70% of the stock is currently owned by hedge funds and other institutional investors.

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.