AAOI Stock Rises Despite Q1 Miss – Here’s Why It Made It As The ‘Top Pick’ For This Analyst

• Applied Optoelectronics missed analysts’ estimates on both earnings and revenue in the first quarter.
• Rosenblatt increased the firm’s price target to $220 from $140, implying 40% upside potential from Thursday’s close.
• CEO Lin stated that the revenue growth should accelerate significantly in the third quarter as new capacity comes online.

Shares of Applied Optoelectronics Inc. (AAOI) rose over 5% on Friday despite missing its quarterly earnings compared to Wall Street expectations.

The company reported first-quarter revenue of $151.1 million, missing the consensus of about $189 million, while the adjusted loss of $0.07 per share came in wider than Wall Street’s estimated earnings of $0.06 per share.

AAOI Sees Stronger Customer Engagement For Its Products

Thompson Lin, Founder, President, and Chief Executive Officer, said that as AI-driven data center investments grow, the company continues to see stronger customer engagement for its 800G transceivers and 1.6 Tb products.

The company expects a strong volume ramp of the 800G products beginning in the second quarter, and projects continued revenue growth throughout the year, Lin said. 

He added that revenue growth should accelerate significantly in the third quarter as new capacity comes online. “We believe we are well-positioned to become the premier high-volume U.S. producer of AI-focused data center transceivers and optics,” said Lin.

Rosenblatt Sees Stellar Upside, Calls AAOI 'Top Pick'

Rosenblatt increased the firm’s price target to $220 from $140, implying a 40% upside potential from Thursday’s closing price.

The analyst called AAOI its "top pick" on strong underlying momentum driven by Amazon's early 800G contributions, imminent Oracle qualification, and with the management accelerating sequential growth through the first half of 2027, along with expanding demand across 100G, 400G, 800G, and emerging 1.6T products. 

AAOI Q2 Guidance

For the second quarter, Applied Optoelectronics expects revenue between $180 million and $198 million, with a non-GAAP gross margin of 29% to 30%. 

The company expects non-GAAP net income between a loss of $2.5 million and income of $2.8 million, translating to non-GAAP earnings per share in the range of a loss of $0.03 per share to a profit of $0.03 per share.

What Do Retail Traders Think About AAOI?

On Stocktwits, retail sentiment surrounding the stock has turned to ‘bullish’ from ‘neutral’ while message volumes have improved to ‘high’ from ‘normal’ in the past 24 hours.

One user on Stocktwits expects the stock to cross the $200 mark.

Another user expects a growing demand for the company.

https://stocktwits.com/ChipDistribution7/message/652718865

Shares of Applied Optoelectronics have more than tripled so far this year.

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