Applied Optoelectronics (NASDAQ:AAOI) saw its share price increase by 15.53 percent on Friday to finish at $150.28 apiece, as investors began positioning portfolios in anticipation of major business updates.
According to the company, Chief Finance and Strategy Officer Stefan Murry is set to present at Rosenblatt’s 6th annual technology summit on Tuesday, August 18.
Investors are likely to watch for the company’s updated outlook and targets, as well as how the company has so far performed in the first few weeks of the third quarter.
For illustration purposes only. Photo by Brett Sayles on Pexels
Optimistic Outlook
Earlier this month, Applied Optoelectronics (NASDAQ:AAOI) issued a revenue outlook of $255 million to $290 million for the third quarter of the year, marking an implied growth of 115 percent to 144 percent from the $118.6 million posted in the same period last year, buoyed by confidence about a strong demand for its 800G and 1.6T transceivers.
It also targets a swing to a net income range of $10.1 million to $24 million from a net loss of $5.4 million year-on-year.
Million-Dollar Orders in Q2
The rally can be supported by the company’s newly bagged deals in March and the second quarter of the year.
On March 9 alone, Applied Optoelectronics (NASDAQ:AAOI) received its first volume order for its 1.6T data center transceivers from one of its long-time customers aiming to boost its network bandwidth for AI workloads.
A few weeks later, it received another order from a hyperscaler customer for its 800G single-mode data center transceivers to support its network capacity for AI-driven workloads.
On April 2, Applied Optoelectronics (NASDAQ:AAOI) said that the customer clinched another $71 million order for the same data center transceivers, bringing the latter’s total orders to $124 million.
Expansion Underway
In line with the strong demand, the company is underway with the expansion of its facilities in Pearland and Sugar Land in Texas, in line with plans to boost its manufacturing capabilities.
The Pearland facility alone will add two adjacent buildings, equivalent to 388,000 square feet of manufacturing capacity, construction of which officially kicked off earlier this year.
It also secured a $20.8 million innovation fund grant from the State of Texas to support its production expansion in Sugar Land.
The Sugar Land facility is currently under construction and is set to expand its manufacturing facility to 210,000 sq.ft. It is set to become one of its largest production facilities for AI-focused data center transceivers in the US, and is expected to generate over 500 new jobs.
Hedge Funds Buy In
Institutional investors signaled a strong conviction in the company, as evident in the increase in participating hedge funds and the 215 percent surge in their combined investments.
Data from Insider Monkey showed that a total of 55 hedge funds held positions in Applied Optoelectronics (NASDAQ:AAOI) in the first quarter of the year—the same period its optical orders surged. This was up from the 36 hedge funds in the quarter prior.
Notably, their combined holdings more than tripled to $871.3 million from only $277 million in the fourth quarter of 2025, signaling that large investors grew substantially more bullish on the stock.
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