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AAOI vs. CBRS: Which AI Infrastructure Stock Has an Edge Now?
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Key Takeaways
AAOI leads CBRS on strong optical demand, better stock performance, and a positive earnings outlook.
AAOI's data center revenues surged 140.4% in Q2 2026, driven by strong demand for 400G and 800G products.
Cerebras' revenues jumped 103% in Q2, but margin pressure and heavy spending remain concerns.
Applied Optoelectronics (AAOI - Free Report) and Cerebras Systems (CBRS - Free Report) operate in the AI infrastructure ecosystem and benefit from growing investments in AI-powered data centers. While AAOI specializes in high-speed optical networking solutions that enable faster data transmission, Cerebras develops advanced AI processors and computing systems. Both companies are positioned to capitalize on rising demand for high-performance AI infrastructure.
Applied Optoelectronics or Cerebras Systems — Which of these AI Infrastructure stocks has the greater upside potential? Let’s find out.
The Case for AAOI Stock
Applied Optoelectronics is benefiting from accelerating optical networking demand, driven by artificial intelligence (AI) infrastructure investments and hyperscale data center upgrades. The company’s data center revenues surged 140.4% year over year to $107.7 million in second-quarter 2026. Revenues from 400G products increased more than fourfold, while 800G revenues climbed more than tenfold. Forecast demand for 800G and 1.6T products is expected to exceed production capacity through mid-2027.
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.
Strong demand for AAOI's next-generation data center products, driven by the rapid expansion of AI infrastructure and the company’s ongoing investments in manufacturing capacity, is expected to boost top-line growth. For the third quarter of 2026, Applied Optoelectronics expects revenues between $255 million and $290 million.
The Case For CBRS Stock
Cerebras is benefiting from robust demand for artificial intelligence (AI) infrastructure, driven by the rapid adoption of high-speed inference across enterprises, hyperscalers and AI developers. The company’s second-quarter 2026 core revenues surged 103% year over year to $209.9 million, reflecting strong demand for its AI computing solutions. Core cloud and other services revenues jumped 287% to $127.7 million, supported by expanding OpenAI deployments and increased cloud customer usage.
The company is aggressively expanding its data center footprint to capitalize on increasing AI infrastructure investments. The company secured more than 600 megawatts of data center capacity, either operational or under contract for delivery by the end of 2027. Its manufacturing expansion initiatives, supported by partnerships with Flex, Sanmina and TSMC, are expected to increase manufacturing capacity by more than tenfold in 2026. These investments position Cerebras to address growing customer demand and accelerate revenue growth.
Strategic collaborations with OpenAI, Amazon Web Services (AWS) and other hyperscalers further strengthen Cerebras’ growth prospects. Its partnership with OpenAI is supporting strong demand for high-speed AI inference, while AWS integration through Amazon Bedrock, expected to become generally available in the first quarter of 2027, should expand enterprise adoption. Growing customer engagement across AI coding, agentic workflows and cybersecurity also offers opportunities to diversify revenue streams.
However, the company is not yet profitable and is expected to suffer from higher spending. In the second quarter of 2026, core gross margin improved to 41%, up 940 basis points year over year but contracted 590 bps sequentially. Core operating margin remained negative 16%, highlighting that CBRS is still investing heavily ahead of its expected growth. For the third quarter of 2026, operating margin is expected to be between negative 25% and negative 23%, while the 2026 range is negative 19% to negative 17%.
Price Performance and Valuation of AAOI and CBRS
Over the trailing three months, AAOI and CBRS shares have plunged 32% and 45.3%, respectively. The decline in AAOI can be attributed to production capacity and key component supply constraints, which have limited its ability to meet surging customer demand for next-generation AI infrastructure products. Despite headwinds, the company outperformed CBRS due to robust performance in the data center business. The surge in AI infrastructure deployments requiring high-speed optical transceivers remains noteworthy.
CBRS's underperformance stems from near-term margin pressure from higher costs of renting back systems to expand cloud capacity. Data center availability constraints and deployment delays could limit revenue growth, while significant investments in manufacturing and infrastructure weigh on profitability. Heavy dependence on OpenAI poses customer concentration risks.
AAOI and CBRS Stock Performance
Image Source: Zacks Investment Research
Both AAOI and CBRS shares are currently overvalued, as suggested by a Value Score of F and D, respectively.
Moreover, Wall Street’s consensus price target implies roughly 136.31% upside from current levels for Cerebras, while for AAOI the expectation is 106.93%.
CBRS Consensus Price Target
Image Source: Zacks Investment Research
AAOI Consensus Price Target
Image Source: Zacks Investment Research
How Do Earnings Estimates Compare for AAOI & CBRS?
The Zacks Consensus Estimate for AAOI’s 2026 earnings is pegged at 79 cents per share, which has been unchanged over the past 30 days. This indicates a 403.85% increase year over year.
While both Applied Optoelectronics and Cerebras stand to benefit from the AI infrastructure boom, AAOI appears to be the better investment choice due to strong demand for optical networking, accelerating 800G and 1.6T adoption, and expanding manufacturing capacity. AAOI’s positive earnings outlook and relatively better stock performance give it an edge over CBRS, which faces profitability challenges and margin pressure.
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AAOI vs. CBRS: Which AI Infrastructure Stock Has an Edge Now?
Key Takeaways
Applied Optoelectronics (AAOI - Free Report) and Cerebras Systems (CBRS - Free Report) operate in the AI infrastructure ecosystem and benefit from growing investments in AI-powered data centers. While AAOI specializes in high-speed optical networking solutions that enable faster data transmission, Cerebras develops advanced AI processors and computing systems. Both companies are positioned to capitalize on rising demand for high-performance AI infrastructure.
Applied Optoelectronics or Cerebras Systems — Which of these AI Infrastructure stocks has the greater upside potential? Let’s find out.
The Case for AAOI Stock
Applied Optoelectronics is benefiting from accelerating optical networking demand, driven by artificial intelligence (AI) infrastructure investments and hyperscale data center upgrades. The company’s data center revenues surged 140.4% year over year to $107.7 million in second-quarter 2026. Revenues from 400G products increased more than fourfold, while 800G revenues climbed more than tenfold. Forecast demand for 800G and 1.6T products is expected to exceed production capacity through mid-2027.
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.
Strong demand for AAOI's next-generation data center products, driven by the rapid expansion of AI infrastructure and the company’s ongoing investments in manufacturing capacity, is expected to boost top-line growth. For the third quarter of 2026, Applied Optoelectronics expects revenues between $255 million and $290 million.
The Case For CBRS Stock
Cerebras is benefiting from robust demand for artificial intelligence (AI) infrastructure, driven by the rapid adoption of high-speed inference across enterprises, hyperscalers and AI developers. The company’s second-quarter 2026 core revenues surged 103% year over year to $209.9 million, reflecting strong demand for its AI computing solutions. Core cloud and other services revenues jumped 287% to $127.7 million, supported by expanding OpenAI deployments and increased cloud customer usage.
The company is aggressively expanding its data center footprint to capitalize on increasing AI infrastructure investments. The company secured more than 600 megawatts of data center capacity, either operational or under contract for delivery by the end of 2027. Its manufacturing expansion initiatives, supported by partnerships with Flex, Sanmina and TSMC, are expected to increase manufacturing capacity by more than tenfold in 2026. These investments position Cerebras to address growing customer demand and accelerate revenue growth.
Strategic collaborations with OpenAI, Amazon Web Services (AWS) and other hyperscalers further strengthen Cerebras’ growth prospects. Its partnership with OpenAI is supporting strong demand for high-speed AI inference, while AWS integration through Amazon Bedrock, expected to become generally available in the first quarter of 2027, should expand enterprise adoption. Growing customer engagement across AI coding, agentic workflows and cybersecurity also offers opportunities to diversify revenue streams.
However, the company is not yet profitable and is expected to suffer from higher spending. In the second quarter of 2026, core gross margin improved to 41%, up 940 basis points year over year but contracted 590 bps sequentially. Core operating margin remained negative 16%, highlighting that CBRS is still investing heavily ahead of its expected growth. For the third quarter of 2026, operating margin is expected to be between negative 25% and negative 23%, while the 2026 range is negative 19% to negative 17%.
Price Performance and Valuation of AAOI and CBRS
Over the trailing three months, AAOI and CBRS shares have plunged 32% and 45.3%, respectively. The decline in AAOI can be attributed to production capacity and key component supply constraints, which have limited its ability to meet surging customer demand for next-generation AI infrastructure products. Despite headwinds, the company outperformed CBRS due to robust performance in the data center business. The surge in AI infrastructure deployments requiring high-speed optical transceivers remains noteworthy.
CBRS's underperformance stems from near-term margin pressure from higher costs of renting back systems to expand cloud capacity. Data center availability constraints and deployment delays could limit revenue growth, while significant investments in manufacturing and infrastructure weigh on profitability. Heavy dependence on OpenAI poses customer concentration risks.
AAOI and CBRS Stock Performance
Image Source: Zacks Investment Research
Both AAOI and CBRS shares are currently overvalued, as suggested by a Value Score of F and D, respectively.
Moreover, Wall Street’s consensus price target implies roughly 136.31% upside from current levels for Cerebras, while for AAOI the expectation is 106.93%.
CBRS Consensus Price Target
Image Source: Zacks Investment Research
AAOI Consensus Price Target
Image Source: Zacks Investment Research
How Do Earnings Estimates Compare for AAOI & CBRS?
The Zacks Consensus Estimate for AAOI’s 2026 earnings is pegged at 79 cents per share, which has been unchanged over the past 30 days. This indicates a 403.85% increase year over year.
Applied Optoelectronics, Inc. Price and Consensus
Applied Optoelectronics, Inc. price-consensus-chart | Applied Optoelectronics, Inc. Quote
The consensus mark for Cerebras’ 2026 loss has been unchanged at 52 cents per share over the past 30 days.
Cerebras Systems Inc. Price and Consensus
Cerebras Systems Inc. price-consensus-chart | Cerebras Systems Inc. Quote
Conclusion
While both Applied Optoelectronics and Cerebras stand to benefit from the AI infrastructure boom, AAOI appears to be the better investment choice due to strong demand for optical networking, accelerating 800G and 1.6T adoption, and expanding manufacturing capacity. AAOI’s positive earnings outlook and relatively better stock performance give it an edge over CBRS, which faces profitability challenges and margin pressure.
Both AAOI and CBRS currently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.