Applied Optoelectronics (NASDAQ:AAOI) grew its share prices by as much as 17.6 percent on Monday to $110.95 apiece, as investors resumed buying positions ahead of an expected strong earnings performance in the second quarter of the year.
For the period, the company is expected to report a 75 to 92 percent jump in revenues to a range of $180 million to $192 million, versus the $103 million posted in the same period last year.
It expects to swing to a non-GAAP net income of $2.8 million from a $2.5 million net loss in the same comparable period, as well as a non-GAAP loss per share of $0.03 to earnings of $0.03, versus a $0.16 loss per share in the same period last year.
Applied Optoelectronics (NASDAQ:AAOI) is scheduled to release the official figures after market close on Thursday, August 6. A conference call will be held to elaborate on the results.
Photo from Applied Optoelectronics Facebook page
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 from one of its long-time customers for its 1.6T data center transceivers 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, boosting the client’s total orders to $124 million.
At present, 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, adding approximately 388,000 square feet of manufacturing capacity, construction of which officially kicked off last month.
It also secured a $20.8 million innovation fund grant from the State of Texas to support its production expansion in Sugar Land.
Applied Optoelectronics (NASDAQ:AAOI) said that expansion plans are underway to occupy an additional 210,000 sq.ft. manufacturing facility adjacent to its current headquarters in Sugar Land, where it will establish one of the largest production capacities for AI-focused data center transceivers in the US and 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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