AAOI Stock On Track To Open At Over 8-Year Highs: B. Riley Upgrade, Retail Optimism Drive Rally

The company reported a 34% jump in fourth-quarter revenue to $134.3 million, beating Wall Street’s estimates of $128.2 million, according to Fiscal.ai data.

• B. Riley upgraded Applied Optoelectronics to ‘Neutral’ from ‘Sell’ and raised the price target to $54 from $15.
• The brokerage expects 800G products to be a key growth driver from Q2.
• Applied Optoelectronics also signed an equity distribution to raise up to $250 million.

Shares of Applied Optoelectronics (AAOI) surged 20% in pre-market trading on Friday, putting the stock on track for its highest open since October 2017, after a bullish analyst call amplified momentum from its stronger-than-expected fourth-quarter results.

The semiconductor company’s Q4 revenue jumped 34% to $134.3 million, beating Wall Street’s estimates of $128.2 million, according to Fiscal.ai data. Applied Optoelectronics posted a loss of $0.03 per share, which was below the consensus estimate of $0.11 per share.

For the first quarter of fiscal 2026, the company expects revenue between $150 million and $165 million, and a non-GAAP net loss of $7.0 million to $0.3 million, or a loss of $0.09 per share to breakeven.

According to a SEC filing on Thursday, Applied Optoelectronics entered into an equity distribution agreement with Raymond James & Associates and Needham & Company, enabling it to raise up to $250 million through at-the-market sales of its common stock, with the two firms acting as agents.

B. Riley Bets On AAOI’s 800G Product Pipeline

After the Q4 earnings, B. Riley upgraded Applied Optoelectronics to ‘Neutral’ from ‘Sell’ and significantly raised the price target to $54 from $15, according to The Fly.

The brokerage attributed the upgrade to ongoing strength in 400G (Gigabit Ethernet), where demand remains robust, led by steady order flow from key customer Amazon (AMZN). B. Riley also expects 800G transceivers to be a key growth driver from the second quarter of fiscal 2026.

“We have begun ramping up production of this 800G module in anticipation of a strong volume ramp starting in Q2. Focus demand for 800G module are projected to exceed our production capacity through mid-2027. We are working to add additional capacity to meet this demand. 800G is expected to dominate our revenue beginning in Q2,” Chairman and CEO Thompson Lin, said in a call with analysts.

How Did Stocktwits Users React?

The results got retail investors buzzing, with message volumes on Stocktwits increasing by around 167% over a 24-hour period. Sentiment for AAOI on the platform was ‘bullish.’  

One user expects the stock to soar over the coming months, primarily due to the company’s guidance.

Another user said they would consider initiating new positions if the stock experiences a pullback.

However, one bearish user called the price action “crazy” for a company not making a profit.

Year-to-date, the stock has surged more than 76%.

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