Applied Optoelectronics (AAOI) is currently experiencing a surge in demand for its 800G optical transceivers. In Q2 2026, AAOI’s 800G revenue reached $12.8 million, indicating a significant growth from previous periods. This growth is expected to continue, with projections of nearly fivefold growth in Q3 2026. Despite facing competition from Lumentum (LITE) and Coherent (COHR), AAOI’s strategic manufacturing expansion—scaling production from 200,000 units per month to over 650,000—positions it well.
Lumentum benefits from strong demand for its optical components, particularly due to the shift toward AI workloads. Meanwhile, Coherent also sees robust growth in AI-related markets, driven by increased customer bookings and expanded production capacity.
Financially, AAOI’s stock has surged by 208.7% year-to-date, significantly outperforming sector benchmarks. However, it carries a Value Score of F, indicating overvaluation compared to industry averages. The Zacks Consensus Estimate predicts AAOI will earn 79 cents per share in 2026, reflecting substantial year-over-year growth despite a recent downward revision.
Overall, while AAOI faces stiff competition, its strong demand for 800G products and manufacturing ramp-up give it an edge moving forward.
