My position: I own AAOI and I'm holding through this. I am not a financial advisor, and nothing here is investment advice. This column is my personal opinion.
Key points
- Applied Optoelectronics (AAOI) did a double beat: record revenue of $191.9 million (up 86%) and non-GAAP profit of $0.06 a share versus $0.01 expected, though it still posted a GAAP loss of $0.28.
- Guided Q3 revenue to $255 million to $290 million, up about 42% from Q2 at the midpoint but near the $278 million analysts already expected.
- After the release the stock spiked to $141.99, fell to $114.88, then leveled near $125, about where it closed, after a 72% run into the report.
- AAOI has fallen the day after 5 of its last 6 reports; the one exception, last February, jumped 57% and launched the run toward $223.
- Optics peers rose after hours: Lumentum (LITE) about 3.6% and Coherent (COHR) about 2.3%. Both report next week.
Applied Optoelectronics (AAOI) reported after the close Thursday, and the stock put on a show. It shot up to almost $142, gave all of that back and then some down to $114.88, and by late evening it had settled around $125, right about where it closed. I own it, so I watched the whole thing.
Here's the strange part. The quarter was actually good.
Revenue came in at a record $191.9 million. That's up 86% from a year ago, and it's past the $190.5 million the Street was looking for. Then the part I didn't expect: AOI actually made money, $0.06 a share adjusted, against the penny analysts had modeled. That's its first non-GAAP profit in over a year. So yeah, a double beat.
It wasn't spotless. On a GAAP basis, which counts the items the adjusted number leaves out (here's our guide to that difference), AOI still lost $22.8 million, or $0.28 a share. Gross margin was 27.7% GAAP and 29.8% adjusted.
Dr. Thompson Lin, AOI's founder and CEO, called it "a pivotal quarter for AOI," pointing to record revenue for the fifth quarter running and the return to non-GAAP profitability. The 800G transceivers that shuttle data around AI datacenters did the heavy lifting, and he said volume there "more than doubled sequentially."
Then the guide, which is usually what actually moves this stock. AOI told everyone to expect $255 million to $290 million next quarter. The midpoint, $272.5 million, is about 42% above the quarter it just posted. That sounds enormous, and sequentially it is. But analysts were already parked at $278.3 million, a touch above that midpoint. So the guide that looks like a moonshot basically matched what the Street had already modeled.
| Metric | Q2 2026 | vs. estimate/prior |
|---|---|---|
| Revenue | $191.9M | Est. $190.5M |
| Non-GAAP EPS | $0.06 | Est. $0.01 |
| GAAP net loss | -$22.8M | -$0.28/sh |
| Non-GAAP gross margin | 29.8% | 27.7% GAAP |
| Q3 revenue guide | $255M-$290M | Est. $278.3M |
| Q3 non-GAAP net income | $10.1M-$24.0M | guidance |
The reaction itself was a whole ride in one evening. AOI had already closed the regular session down 3.4% at $124.22, before the report even hit. Seconds after the release it ran to $141.99, up about 14%. Then it handed the entire spike back and kept going, down to $114.88 in the same five-minute window. By late evening it had climbed back to around $125. A big swing that ended just about flat.
It usually drops the day after
This is the part I really want you to see, and it's why the after-hours chop doesn't rattle me. AOI has a habit of selling off once the report gets digested. Go back through its last six reports and it fell the day after five of them.
| Report | Next-day move |
|---|---|
| Feb 2025 | -4.6% |
| May 2025 | -0.6% |
| Aug 2025 | -3.3% |
| Nov 2025 | -1.8% |
| Feb 2026 | +56.9% |
| May 2026 | -5.5% |
The one exception? This past February. It ripped 57% the next day, and that's the report that kicked off the whole run to $223. So if AOI is soft Friday, that won't be a shock. For this stock, that's the base case. The report landed after Thursday's close, so the real reaction is Friday's session.
Here's the tell, though: the rest of the optics group didn't sell off with AOI. Lumentum (LITE) and Coherent (COHR) both caught a bid after hours, up about 3.6% and 2.3%. Credo (CRDO) and POET Technologies (POET) each added around 1%, and Fabrinet (FN) and Ciena (CIEN) sat about flat. Why do I care? Because Lumentum, Coherent and Fabrinet all report next week, August 11, 12 and 17. Those are the numbers I'm actually waiting on.
Beats haven't been getting much love this week, either. Datadog (DDOG) beat and raised Thursday morning and still dropped about 19% after its own huge run. When a stock has already flown this far, a good quarter often just hands buyers a reason to take profits.
Where I stand
I own AAOI and I'm holding every share through this. I held through the whole thing, the $142 spike and the $115 flush both. The demand Lin described isn't slowing, and the rest of the group traded up while AOI just chopped, so the after-hours mess reads like AOI-specific noise, not a crack in the sector.
My real bet is next week. Lumentum and Coherent report Tuesday and Wednesday, and I think they confirm the same 800G demand AOI just showed. When they do, I think AOI runs, and I think it runs harder than the names that reported, because it already handed you the numbers and the guide and got sold anyway. That's my opinion, not a promise, and if the peers whiff the whole group can turn. But I'm not trading around it. I'm holding into next week.
Sources
- Applied Optoelectronics second-quarter 2026 results release and management commentary from Dr. Thompson Lin
- Q3 2026 guidance, and analyst estimates of $190.5M for Q2 revenue and $278.3M for Q3
- Price data, earnings-day reactions and Thursday after-hours trading, February 2025 through August 6, 2026
- Peer after-hours moves and report dates: Lumentum, Coherent, Credo, POET, Fabrinet and Ciena
