Applied Optoelectronics raises 2026 outlook despite Q1 miss

Applied Optoelectronics, Inc. (NASDAQ:AAOI) reported first-quarter sales of $151.1 million and a loss of $0.07 per share, missing market expectations of $157 million in revenue and a loss of $0.05 per share. The shortfall was primarily driven by lower-than-anticipated sales in the data centre sector. Despite the quarterly miss, the company raised its full-year 2026 outlook to $1.1 billion in sales and $140 million in operating profit, up from previous guidance of $1 billion in sales and over $100 million in operating profit.

For the second quarter, Applied Optoelectronics expects revenue between $180 million and $198 million, with earnings of $0.00 per share at the midpoint of its guidance. This compares to market estimates of $197 million in revenue and earnings of $0.07 per share. The company also increased its forecast for monthly transceiver sales by mid-2027 to $471 million from its previous estimate of $378 million, supported by stronger revenue from 1.6T products.

Wolfe Research analyst George Notter reaffirmed a Peerperform rating on AAOI on May 8, citing concerns about the company’s ability to meet strong demand from cloud providers. The research firm pointed to the potential for the company to struggle with capacity constraints as it attempts to keep up with robust demand from major cloud infrastructure operators.

Applied Optoelectronics, Inc. is a leading developer and manufacturer of advanced optical and Hybrid Fiber-Coax (HFC) networking products for AI datacenters, CATV and broadband fiber access networks. The company serves customers across cloud computing, CATV broadband, telecommunications, and fiber-to-the-home markets.

Wolfe Research also introduced its 2028 forecast of $2.837 billion in sales and $5.00 in earnings per share for the company. While the firm acknowledges the potential of AAOI as an investment, it noted that certain other AI stocks may offer greater upside potential with less downside risk.