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AAOI's CATV Business Gains Momentum: Can It Beat LITE and COHR?
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Key Takeaways
AAOI's CATV revenues surged 43.8% to a record $80.6 million in second-quarter 2026.
DOCSIS 4.0 upgrades, amplifier shipments and Mediacom's adoption fuel growth.
AAOI expects third-quarter CATV revenues of $100-$110 million and over $325 million annually.
Applied Optoelectronics (AAOI - Free Report) is benefiting from robust demand for its cable television (CATV) products, driven by accelerating network upgrades and increasing adoption of DOCSIS 4.0 technology. Strong shipments of next-generation amplifiers, expanding customer relationships, and growing demand for software solutions are strengthening the company’s growth prospects and competitive positioning against Lumentum (LITE - Free Report) and Coherent (COHR - Free Report) in the optical networking market.
In the second quarter of 2026, CATV revenues surged 43.8% year over year and 20.6% sequentially to a record $80.6 million, which accounted for approximately 42% of total revenues. Results benefited from significant shipments of 1.8 GHz amplifiers to its largest CATV customer and growing engagement with newer multiple-system operator customers.
AAOI’s selection by Mediacom as its primary vendor for DOCSIS 4.0 network upgrades represents another significant growth opportunity. The deployment of QuantumLink software and next-generation 1.8 GHz Quantum bandwidth smart amplifiers is expected to improve network reliability while reducing operational costs.
Further expanding its portfolio, in September, AAOI announced plans to showcase its first live Quantum30 3.0 GHz proof-of-concept demonstration at SCTE TechExpo in Atlanta. The demo will feature live downstream operation at 3.0 GHz over a coaxial network using a concept amplifier, SC-QAMs, OFDM channels and a 3.0 GHz DOCSIS signal generator. Building on its Quantum18 platform, AAOI aims to help cable operators evaluate network requirements beyond DOCSIS 4.0’s 1.8 GHz capacity. The company also released a white paper examining engineering, operational, and economic considerations associated with expanding hybrid fiber-coaxial networks toward 3.0 GHz.
AAOI’s expanding CATV portfolio, growing customer adoption and continued investments in next-generation broadband technologies are expected to sustain growth momentum and strengthen its competitive position against Lumentum and Coherent. The company expects third-quarter 2026 CATV revenues between $100 million and $110 million, reflecting strong sequential growth. It also anticipates annual CATV revenues exceeding $325 million, supported primarily by amplifier shipments and initial software contributions.
How Competitors Fare Against AAOI
Applied Optoelectronics is facing stiff competition from Lumentum and Coherent 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.
Coherent is benefiting from the strong demand in AI data center and communications markets, leading to record revenues and accelerated growth. Key drivers included strong customer bookings, expansion of production capacity, especially in 6-inch indium phosphide output and the ramp-up of new products like advanced transceivers and optical circuit switching systems.
AAOI’s Share Price Performance, Valuation, and Estimates
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 24.29X compared with the Computer & Technology industry’s 19X.
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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AAOI's CATV Business Gains Momentum: Can It Beat LITE and COHR?
Key Takeaways
Applied Optoelectronics (AAOI - Free Report) is benefiting from robust demand for its cable television (CATV) products, driven by accelerating network upgrades and increasing adoption of DOCSIS 4.0 technology. Strong shipments of next-generation amplifiers, expanding customer relationships, and growing demand for software solutions are strengthening the company’s growth prospects and competitive positioning against Lumentum (LITE - Free Report) and Coherent (COHR - Free Report) in the optical networking market.
In the second quarter of 2026, CATV revenues surged 43.8% year over year and 20.6% sequentially to a record $80.6 million, which accounted for approximately 42% of total revenues. Results benefited from significant shipments of 1.8 GHz amplifiers to its largest CATV customer and growing engagement with newer multiple-system operator customers.
AAOI’s selection by Mediacom as its primary vendor for DOCSIS 4.0 network upgrades represents another significant growth opportunity. The deployment of QuantumLink software and next-generation 1.8 GHz Quantum bandwidth smart amplifiers is expected to improve network reliability while reducing operational costs.
Further expanding its portfolio, in September, AAOI announced plans to showcase its first live Quantum30 3.0 GHz proof-of-concept demonstration at SCTE TechExpo in Atlanta. The demo will feature live downstream operation at 3.0 GHz over a coaxial network using a concept amplifier, SC-QAMs, OFDM channels and a 3.0 GHz DOCSIS signal generator. Building on its Quantum18 platform, AAOI aims to help cable operators evaluate network requirements beyond DOCSIS 4.0’s 1.8 GHz capacity. The company also released a white paper examining engineering, operational, and economic considerations associated with expanding hybrid fiber-coaxial networks toward 3.0 GHz.
AAOI’s expanding CATV portfolio, growing customer adoption and continued investments in next-generation broadband technologies are expected to sustain growth momentum and strengthen its competitive position against Lumentum and Coherent. The company expects third-quarter 2026 CATV revenues between $100 million and $110 million, reflecting strong sequential growth. It also anticipates annual CATV revenues exceeding $325 million, supported primarily by amplifier shipments and initial software contributions.
How Competitors Fare Against AAOI
Applied Optoelectronics is facing stiff competition from Lumentum and Coherent 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.
Coherent is benefiting from the strong demand in AI data center and communications markets, leading to record revenues and accelerated growth. Key drivers included strong customer bookings, expansion of production capacity, especially in 6-inch indium phosphide output and the ramp-up of new products like advanced transceivers and optical circuit switching systems.
AAOI’s Share Price Performance, Valuation, and Estimates
Applied Optoelectronics shares have skyrocketed 120.7% year to date, outperforming the Zacks Computer & Technology sector’s 14.9% rise and the Zacks Electronics - Semiconductors increase of 15.9%.
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 24.29X compared with the Computer & Technology industry’s 19X.
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.