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Applied Optoelectronics Rides on AI Boom: Can It Beat LITE and FN?
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Key Takeaways
AAOI's data-center revenues surged 140.4% year over year to $107.7 million in second-quarter 2026.
800G revenues hit $12.8 million, with third-quarter sales expected to grow nearly fivefold sequentially.
AAOI has over $200 million in 1.6T orders, with initial shipments expected to begin in the third quarter.
Applied Optoelectronics (AAOI - Free Report) is benefiting from accelerating artificial intelligence (AI)-driven data-center investments, which are fueling demand for high-speed optical transceivers. The company’s expanding 800G and 1.6-terabit portfolio strengthens its position against Lumentum (LITE - Free Report) and Fabrinet (FN - Free Report) . In second-quarter 2026, AAOI’s data-center revenues surged 140.4% year over year to $107.7 million, which accounted for 56% of total revenues.
The AI boom is particularly boosting demand for AAOI’s 800G products. Second-quarter 800G revenues reached $12.8 million, increasing more than tenfold year over year and more than doubling sequentially. Management expects 800G revenues to grow nearly fivefold sequentially in the third quarter, with demand remaining above production capacity.
The upcoming 1.6T ramp should further strengthen AAOI’s AI exposure. The company expects initial shipments to begin in the third quarter, followed by a larger ramp through 2027. AAOI already has more than $200 million of 1.6T orders in hand, while customer demand continues to exceed available capacity.
Further expanding its portfolio, in July 2026, AAOI began expanding its Pearland, TX, manufacturing campus by nearly 400,000 square feet to increase production of 800G and 1.6T optical transceivers for AI and cloud infrastructure. The new facilities will strengthen AAOI’s manufacturing capacity, support long-term growth and meet rising demand for high-speed optical networking products. The expansion is expected to create high-quality jobs while reinforcing AAOI’s position as a key supplier to AI data center and cloud infrastructure markets.
AAOI’s robust demand for its next-generation data center products, particularly driven by the rapid expansion of AI infrastructure and the company’s ongoing investments in manufacturing capacity, is expected to benefit the company’s top-line growth. For the third quarter of 2026, Applied Optoelectronics expects revenues between $255 million and $290 million.
How Competitors Fare Against AAOI
Applied Optoelectronics is facing stiff competition from Lumentum and Fabrinet in the AI space.
Lumentum is benefiting from strong demand for its optical components and systems, driven by the industry shift to AI workloads and increased data center connectivity. Key growth drivers include record shipments of 800G and next-generation 1.6T cloud transceivers, strong momentum in pump and EML laser sales, and successful ramp-up of new technologies like near-packaged optics and co-packaged optics.
Fabrinet is benefiting from strong AI-driven data-center demand as hyperscalers accelerate investments in high-speed optical connectivity, data-center interconnect (DCI), and high-performance computing (HPC). In fourth-quarter fiscal 2026, data-center revenues jumped 68% year over year and 13% sequentially to $669 million, which accounted for 51% of total revenues. DCI was the largest contributor to growth, with its annualized revenue run rate exceeding $1 billion, while HPC also delivered solid growth.
AAOI’s Share Price Performance, Valuation, and Estimates
Applied Optoelectronics shares have skyrocketed 189.9% year to date, outperforming the Zacks Computer & Technology sector’s 23.4% rise and the Zacks Electronics - Semiconductors increase of 37.9%.
AAOI Stock’s Performance
Image Source: Zacks Investment Research
Applied Optoelectronics shares are currently overvalued, as suggested by its Value Score of F. AAOI stock is trading at a premium with a trailing 12-month Price/Sales of 13.83X compared with the Computer & Technology industry’s 8.71X.
AAOI’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for 2026 earnings is pegged at 79 cents per share, which has been unchanged over the past 30 days. This suggests 403.85% year-over-year growth.
View the Zacks #1 Rank List
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Applied Optoelectronics Rides on AI Boom: Can It Beat LITE and FN?
Key Takeaways
Applied Optoelectronics (AAOI - Free Report) is benefiting from accelerating artificial intelligence (AI)-driven data-center investments, which are fueling demand for high-speed optical transceivers. The company’s expanding 800G and 1.6-terabit portfolio strengthens its position against Lumentum (LITE - Free Report) and Fabrinet (FN - Free Report) . In second-quarter 2026, AAOI’s data-center revenues surged 140.4% year over year to $107.7 million, which accounted for 56% of total revenues.
The AI boom is particularly boosting demand for AAOI’s 800G products. Second-quarter 800G revenues reached $12.8 million, increasing more than tenfold year over year and more than doubling sequentially. Management expects 800G revenues to grow nearly fivefold sequentially in the third quarter, with demand remaining above production capacity.
The upcoming 1.6T ramp should further strengthen AAOI’s AI exposure. The company expects initial shipments to begin in the third quarter, followed by a larger ramp through 2027. AAOI already has more than $200 million of 1.6T orders in hand, while customer demand continues to exceed available capacity.
Further expanding its portfolio, in July 2026, AAOI began expanding its Pearland, TX, manufacturing campus by nearly 400,000 square feet to increase production of 800G and 1.6T optical transceivers for AI and cloud infrastructure. The new facilities will strengthen AAOI’s manufacturing capacity, support long-term growth and meet rising demand for high-speed optical networking products. The expansion is expected to create high-quality jobs while reinforcing AAOI’s position as a key supplier to AI data center and cloud infrastructure markets.
AAOI’s robust demand for its next-generation data center products, particularly driven by the rapid expansion of AI infrastructure and the company’s ongoing investments in manufacturing capacity, is expected to benefit the company’s top-line growth. For the third quarter of 2026, Applied Optoelectronics expects revenues between $255 million and $290 million.
How Competitors Fare Against AAOI
Applied Optoelectronics is facing stiff competition from Lumentum and Fabrinet in the AI space.
Lumentum is benefiting from strong demand for its optical components and systems, driven by the industry shift to AI workloads and increased data center connectivity. Key growth drivers include record shipments of 800G and next-generation 1.6T cloud transceivers, strong momentum in pump and EML laser sales, and successful ramp-up of new technologies like near-packaged optics and co-packaged optics.
Fabrinet is benefiting from strong AI-driven data-center demand as hyperscalers accelerate investments in high-speed optical connectivity, data-center interconnect (DCI), and high-performance computing (HPC). In fourth-quarter fiscal 2026, data-center revenues jumped 68% year over year and 13% sequentially to $669 million, which accounted for 51% of total revenues. DCI was the largest contributor to growth, with its annualized revenue run rate exceeding $1 billion, while HPC also delivered solid growth.
AAOI’s Share Price Performance, Valuation, and Estimates
Applied Optoelectronics shares have skyrocketed 189.9% year to date, outperforming the Zacks Computer & Technology sector’s 23.4% rise and the Zacks Electronics - Semiconductors increase of 37.9%.
AAOI Stock’s Performance
Image Source: Zacks Investment Research
Applied Optoelectronics shares are currently overvalued, as suggested by its Value Score of F. AAOI stock is trading at a premium with a trailing 12-month Price/Sales of 13.83X compared with the Computer & Technology industry’s 8.71X.
AAOI’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for 2026 earnings is pegged at 79 cents per share, which has been unchanged over the past 30 days. This suggests 403.85% year-over-year growth.
Applied Optoelectronics, Inc. Price and Consensus
Applied Optoelectronics, Inc. price-consensus-chart | Applied Optoelectronics, Inc. Quote
AAOI’s Zacks Rank
Applied Optoelectronics currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.