Why Is AAOI Stock Surging 10% Premarket?

Applied Optoelectronics beat Q2 expectations, triggering a rise in its shares and those of peers.

• Applied Optoelectronics’ sales rose 86% year over year in Q2, and the company delivered an adjusted profit.
• Investor interest in photonics companies has surged over the past year as hyperscalers ramp up AI infrastructure spending.
• Stocktwits sentiment for AAOI shifted to ‘extremely bullish’ from ‘bullish.’

Applied Optoelectronics (AAOI) shares jumped more than 10% in early premarket trading on Friday after the photonics and data center components maker reported second-quarter results that topped analysts’ expectations. However, the current quarter forecasts missed targets.

Shares of peers POET Technologies, Coherent and Lumentum rose 3%, 4.5% and 3.5%, respectively, in sympathy.

Applied Optoelectronics supplies high-speed optical transceivers, lasers and networking components that move data between AI servers. Investor interest in photonics companies has surged over the past year as hyperscalers ramp up AI infrastructure spending, fueling expectations of a multi-year boom in optical connectivity, which is increasingly seen as a critical enabler for scaling next-generation AI data centers.

AAOI Results Recap

Revenue for the three months ended June increased to $191.9 million, up from $103 million a year earlier, and higher than analysts’ expectation of $190.5 million.

Adjusted earnings were $0.06 per diluted share, compared to a $0.16 per share loss a year earlier.

For the third quarter, Applied Optoelectronics expects EPS of $0.11 to $0.26 on revenue of $255 million to $290 million. Analysts expect EPS of $0.28 on revenue of $278.3 million.

“We delivered record revenue for our fifth consecutive quarter and achieved an important milestone as we returned to non-GAAP profitability in the quarter. Further, we saw a strong volume ramp of our 800G products, which more than doubled sequentially,” CEO Thompson Lin said in the earnings statement.

Retail View On AAOI

AAOI was among the top three trending tickers on Stocktwits at the time of writing, with the retail sentiment for the stock shifting to ‘extremely bullish’ from ‘bullish.’

“AAOI just delivered the kind of quarter investors want to see, and one sentence stands out… The biggest takeaway: demand is still running ahead of supply through mid-2027,” a trader said.

“This isn’t an order problem. It’s a capacity problem. The Texas expansion and production ramp are all about catching up. The risk? Margins are under pressure as they invest heavily. Growth is accelerating, but the buildout comes before the payoff,” they said.

As of the last close, AAOI stock has surged 256% year to date.

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