Applied Optoelectronics (NASDAQ:AAOI) Posts Quarterly Earnings Results, Beats Estimates By $0.11 EPS

Applied Optoelectronics (NASDAQ:AAOI) announced its earnings results on Thursday. The semiconductor company reported ($0.01) earnings per share (EPS) for the quarter, beating analysts’ consensus estimates of ($0.12) by $0.11, FiscalAI reports. The firm had revenue of $134.27 million for the quarter, compared to analyst estimates of $131.56 million. Applied Optoelectronics had a negative return on equity of 7.34% and a negative net margin of 36.97%. Applied Optoelectronics updated its Q1 2026 guidance to -0.090-0.000 EPS.

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

• Delivered a record year with $456 million revenue in 2025 (up 83% YoY) and Q4 revenue of $134.3 million, driven by strong gains in both data center and CATV businesses.
• Strong 800G momentum — AOI received a fourth 800G volume order, completed multiple product qualifications, expects firmware interoperability by March, and is ramping production with 800G forecast to dominate revenue beginning in Q2 while demand is projected to exceed capacity through mid-2027.
• Improved profitability trajectory — Q4 non-GAAP gross margin was 31.4% and non-GAAP EPS was a loss of $0.01; management expects non-GAAP profitability in Q2 2026 and >$1 billion revenue plus >$120 million non-GAAP operating profit for 2026, with a long-term gross margin target near 40%.
• Near-term execution risks — firmware delays reduced 800G revenue below expectations in Q4 and current production is capacity-constrained, leaving near-term ramps dependent on timely firmware fixes, capacity additions, supply-chain timing, and tariff outcomes.
• Concentration and investment risks — top 10 customers accounted for ~96% of Q4 revenue (three customers >10%), while AOI invested heavily in capacity (Q4 CapEx $84M; 2025 CapEx $209M) and increased inventory to $183M, raising execution and financial exposure if demand/timing shifts.

Applied Optoelectronics Trading Down 7.6%

AAOI stock traded down $4.43 during midday trading on Thursday, hitting $53.69. 5,361,271 shares of the company’s stock were exchanged, compared to its average volume of 5,115,486. Applied Optoelectronics has a 1-year low of $9.71 and a 1-year high of $59.25. The company has a current ratio of 2.31, a quick ratio of 1.63 and a debt-to-equity ratio of 0.23. The stock has a market capitalization of $3.67 billion, a PE ratio of -16.67 and a beta of 3.32. The business has a 50-day simple moving average of $40.61 and a two-hundred day simple moving average of $32.00.

Insiders Place Their Bets

In related news, CFO Stefan J. Murry sold 11,693 shares of the firm’s stock in a transaction dated Wednesday, February 11th. The stock was sold at an average price of $50.25, for a total transaction of $587,573.25. Following the completion of the sale, the chief financial officer directly owned 290,050 shares of the company’s stock, valued at approximately $14,575,012.50. This trade represents a 3.88% decrease in their position. The sale was disclosed in a document filed with the Securities & Exchange Commission, which can be accessed through this hyperlink. Also, insider David C. Kuo sold 17,467 shares of the company’s stock in a transaction dated Wednesday, February 11th. The shares were sold at an average price of $50.17, for a total transaction of $876,319.39. Following the completion of the transaction, the insider directly owned 111,663 shares in the company, valued at $5,602,132.71. The trade was a 13.53% decrease in their position. The SEC filing for this sale provides additional information. Over the last quarter, insiders have sold 66,520 shares of company stock valued at $3,080,367. Company insiders own 4.50% of the company’s stock.

Hedge Funds Weigh In On Applied Optoelectronics

A number of hedge funds have recently made changes to their positions in AAOI. Comerica Bank acquired a new position in Applied Optoelectronics during the third quarter worth $28,000. Northwestern Mutual Wealth Management Co. lifted its stake in Applied Optoelectronics by 166.7% during the 4th quarter. Northwestern Mutual Wealth Management Co. now owns 1,200 shares of the semiconductor company’s stock worth $42,000 after acquiring an additional 750 shares in the last quarter. Headlands Technologies LLC purchased a new position in Applied Optoelectronics during the 2nd quarter valued at about $57,000. Wexford Capital LP acquired a new position in Applied Optoelectronics in the 3rd quarter valued at about $95,000. Finally, State of Wyoming purchased a new stake in Applied Optoelectronics during the fourth quarter worth about $160,000. Hedge funds and other institutional investors own 61.70% of the company’s stock.

Analysts Set New Price Targets

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

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.