Applied Optoelectronics rallied for a third consecutive day on Tuesday, jumping 15.76 percent to finish at $119.26 apiece, as investors began positioning their portfolios ahead of the results of its earnings performance in the second quarter of the year.
Photo from Applied Optoelectronics website
92% Revenue Growth Target for Q2
Applied Optoelectronics Inc. (NASDAQ:AAOI) is highly optimistic about its outlook for the second quarter of the year.
The company—which is scheduled to release the results on August 6—earlier said that it is targeting to report 74 to 92 percent growth in revenues in the second quarter to a range of $180 million to $198 million, versus the $103 million posted in the same period last year.
It also expects to either narrow its net loss by 72 percent to $2.5 million from $9.1 million year-on-year, or swing to a net income of up to $2.8 million.
Applied Optoelectronics Inc.’s (NASDAQ:AAOI) optimism builds on the strong demand for its 800G transceivers and 1.6 Tb products amid the rapidly growing AI-driven data center.
Pearland Expansion Kicks Off
In line with its growth strategy, Applied Optoelectronics Inc. (NASDAQ:AAOI) is underway with the expansion of its manufacturing site in Pearland, Texas.
Earlier this week, it kicked off the construction of two adjacent properties, which will add nearly 400,000 square feet of production capacity.
“As we continue to grow and expand our Houston-area footprint, Pearland offers us access to a strong workforce, excellent infrastructure, and room to scale our operations. These facilities will be instrumental in supporting our long-term growth strategy, enabling us to expand production of advanced optical transceivers and strengthen AOI’s position as a key supplier to the AI and cloud infrastructure markets,” Applied Optoelectronics Inc. (NASDAQ:AAOI) Chief Financial and Strategy Officer Stefan Murry said.
More Hedge Funds Buy In
Hedge fund sentiment turned rosy for Applied Optoelectronics Inc. (NASDAQ:AAOI) in the first quarter of the year, with 55 hedge funds holding positions in the firm, up from 36 in the previous quarter.
Their combined holdings also significantly climbed, more than tripling to $871 million from $276.9 million quarter-on-quarter, signaling that more institutional investors are betting on the firm’s rosy prospects and are increasing their exposure to ride the boom.
Of its top institutional investors, Unicom Systems owned the largest chunk at $22.59 million, followed by Assenagon Asset Management at $10.69 million, while Ardsley Partners held $5.13 million worth of positions.
While we acknowledge the risk and potential of AAOI as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AAOI and that has 10,000% upside potential, check out our report about the cheapest AI stock.
READ NEXT: 33 Stocks That Should Double in 3 Years and Cathie Wood 2026 Portfolio: 10 Best Stocks to Buy.
Disclosure: None. Follow Insider Monkey on Google News.
