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Live: Applied Optoelectronics (AAOI) Forecasts Demand Could Surge 10X

By Eric Bleeker · Updated Feb 26, 6:44pm ET · Published Feb 26, 2:41pm ET

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Applied Optoelectronics Forecasts Demand Could Surge Nearly 10X By Mid-2027

Applied Optoelectronic’s conference call is done, but there was a pretty wild quote on it.

The TLDR, revenue for the just finished year was $456 million. AAOI laid out the case on its call how it could be doing $378 million in MONTHLY revenue by mid-2027.

It’s a little shocking that the stock is only up 17% given how outrageously bullish these comments are. Here’s the full quote:

“Going forward, we believe we are well positioned for sustained growth across both our data center and CATV businesses, and the capital investments underway are expected to fundamentally strengthen the company as we execute on these opportunities.

Given the recent surge in customer inquiries and apparent rising demand, we believe that by mid-2027, 100G and 400G revenue will be approximately $90 million. 800G revenue will be approximately $217 million and 1.6 terabit revenue will be approximately $71 million monthly. Altogether, this represents $378 million in monthly revenue for transceiver products.

However, we believe that the customer demand is even larger than this. In order to accommodate this expected surge in demand, we plan to more than triple our laser manufacturing in Texas. We are evaluating our CapEx projections for 2026, and we intend to share those at a later date.”

And here’s another nugget from the call, the company is forecasting more than $1 billion in sales in 2026. Wall Street estimates before the call were $764 million.

“Looking more broadly at 2026. While it’s still early in the year, we expect to generate over $1 billion in revenue this year, with a non-GAAP operating profit of over $120 million.

This revenue level is limited by our production capacity and supply chain, not market demand, which we believe is much larger. Based on our planned capacity additions, we expect to see continued strong sequential revenue growth in the first 2 quarters with an acceleration in the second half of the year as new production capacity comes online and additional customer qualifications are completed and orders begin to ship.

We believe that this is an ambitious yet achievable target based upon our customers’ forecast and what we know about the unprecedented investments that are being made in AI infrastructure.”

All I can say is holy cow. We recommended AAOI back at $22.36 in 24/7 Wall St’s $500,000 AI Portfolio. That price is looking like a steal and I’d be surprised if shares didn’t rise even more than where they’re at right now by tomorrow’s open.

AAOI Shares Now Up 14%

It was a strong beat on Q1 guide, and Applied Optoelectronic shares are ralliyng, now up 14%.

Keep in mind shares dropped 7.6% today, so AAOI has recovered all those losses and gained an additional 6%.

AAOI Earnings Are Out

Revenue of $134.3 million beats, but is near the midpoint of prior guidance.

Q1 guidance is for $150 million to $165 million.

Wall Street had expected $145.7 million. Shares have immediately jumped 9% on the release.

Applied Optoelectronics Closes Down 7.6%

AI infrastructure stocks were hit hard today after Wall Street sold off NVIDIA despite really strong earnings.

We expect Applied’s earnings in less than 10 minutes.

Earnings expected at 4:10 p.m. ET

We expected AAOI’s earnings to hit newswires at about 4:10 p.m. ET. As a reminder, simply stay on this page and new updates will appear automatically once their earnings are released.

Here's What Wall Street Expects in 2026 and 2027

The valuation for Applied Optoelecronics depends heavily on future growth. Here’s what Wall Street expects this year, and looking ahead:

2025 Expectations (Only Q4 Left to Report)

  • Revenue: $453.7 million
  • Adjusted EPS: $-.38

2026 Expectations

  • Revenue: $764 million
  • Adjusted EPS: $.83

2027 Expectations

  • Revenue: $1.36 billion
  • Adjusted EPS: $1.50

Live coverage has ended. The full story is below.

Full Coverage

The story so far

Applied Optoelectronics (Nasdaq: AAOI) reports Q4 FY2025 earnings after the close tonight, February 26, 2026. The stock has been on a remarkable run heading into this report.

At yesterday’s close, AAOI was up nearly 57% year-to-date and 46% over just the past month, fueled by a surge in AI-driven demand for optical networking components. A landmark first 800G hyperscale volume order sent shares sharply higher in recent weeks, followed by another leg up on the company’s announcement of a new ultra-high-power semiconductor laser targeting silicon photonics and co-packaged optics applications.

At $54.58 per share, AAOI is now trading near its 52-week high of $59.25. The bar tonight is high.

What Wall Street Expects Tonight

Here’s the numbers Wall Street expects tonight:

  • Revenue: $128.2 million
  • Adjusted EPS: -$.11

Management’s guidance last quarter disappointed, with projections of revenue between $125 million and $140 million, with a non-GAAP net loss ranging from $9.0 million to $2.8 million and non-GAAP EPS of -$0.13 to -$0.04. That revenue midpoint of roughly $132 million would represent continued strong sequential growth off Q3’s $118.6 million.

Applied Optoelecronics is lightly followed on Wall Street, but the analysts that do follow the company have a consensus target below the midpoint of guidance.

The growth driver analysts are watching is straightforward: 800G transceiver demand tied to the AI data center buildout. Hyperscalers are aggressively upgrading their optical interconnect infrastructure, and AAOI’s positioning in both transceivers and the emerging co-packaged optics space makes it a direct beneficiary. The new pump laser product targeting silicon photonics adds another potential revenue layer that the market is only beginning to price in.

Last Quarter Recap

In Q3 FY2025, AAOI reported revenue of $118.6 million, a slight miss against the $119.77 million estimate. EPS came in at -$0.09, which was roughly inline with Wall Street’s expectations. Gross margin improved meaningfully to 28.0% from 24.4% a year earlier, a positive sign that the product mix is shifting toward higher-value components.

One item worth flagging for context: the company’s Chief Legal Officer sold more than 12,000 shares across transactions in January 2026, and a selling event on January 22 saw five executives including the CEO and CFO sell a combined 45,348 shares at $38.38. Those sales occurred well below the current price and appear consistent with scheduled equity rebalancing plans, but investors should be aware of the pattern heading into tonight.

Nasdaq’s Insider Activity tracker shows 5 insider buys against 18 sells in the past 90 days.

Key Things to Watch

  • 800G order momentum: Management flagged on the Q3 call that significant 800G shipments were expected in Q4. Confirmation of volume shipments and any color on follow-on orders from hyperscaler customers will be the single most important data point tonight.
  • Gross margin trajectory: The improvement from 24.4% to 28.0% year-over-year in Q3 needs to continue. A move toward 30% or above would signal that the product mix shift to higher-end components is accelerating.
  • Pump laser and CPO commercialization: Any concrete update on customer engagements or timelines for the new AI pump laser product could move the stock independently of the headline numbers.
  • Forward guidance: With the stock trading at a forward P/E of roughly 84x, investors are paying for a growth story that hasn’t yet translated to profitability. Management raising or tightening guidance above the current range would validate the premium; cautious commentary would not.

AAOI heads into tonight’s report carrying enormous momentum and equally enormous expectations. The 800G ramp, the pump laser opportunity, and margin expansion are all real catalysts, but the stock has already moved aggressively to price them in. Whether the numbers and management’s tone match the narrative is the question that gets answered after the bell.

Contact [email protected] for any questions or corrections.

Eric Bleeker

Eric Bleeker has been investing for more than 20 years. He began his career working at Microsoft before joining Motley Fool, one of the largest publishers of financial research. In his 15 years at Motley Fool Eric served as the General Manager for Fool.com and led coverage in the Technology & Telecom sector. In addition, he was a featured columnist and has hosted dozens of investing seminars attended by more than a million total investors. Eric has more than 1,000 financial bylines to his name and has been featured in The Wall Street Journal, CNBC, Fox Business, and many other leading publications. He is currently focused on artificial intelligence investing and is a CFA Charterholoder.

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