Applied Optoelectronics Q4 2024: Navigating Contradictions in Capacity, Revenue, and Margins

These are the key contradictions discussed in Applied Optoelectronics' latest 2024 Q4 earnings call, specifically including: Capacity Investments and Production Capacity, Datacenter Revenue Expectations, Gross Margin Expectations, and 800G Order Status:



Revenue and Revenue Growth:
- Applied Optoelectronics (AOI) reported revenue of $100 million for Q4 2024, aligning with the guidance range of $94 million to $104 million.
- The revenue growth was driven by strength in both the datacenter and CATV businesses, with solid momentum heading into 2025.

Datacenter Product Performance:
- The company's datacenter products revenue for Q4 was $44.2 million, essentially flat year-over-year but up 8% sequentially.
- This growth was primarily due to increased adoption of 400G products by datacenter customers and new customers beginning shipments during the year.

CATV Segment Explosion:
- CATV revenue for Q4 reached $52.2 million, more than 4x year-over-year and more than doubling sequentially.
- This surge was due to the shipment of 1.8 GHz amplifiers for a major MSO customer as part of their network upgrade projects.

Manufacturing Capacity Expansion:
- AOI plans to invest between $120 million and $150 million in CapEx in 2025 to expand production, with significant investments expected in Texas to support domestic datacenter transceiver production.
- This expansion is driven by anticipated increasing demand for 400G and 800G transceiver products from both existing and new datacenter customers.

800G Product Demand Forecasts:
- AOI received significant demand forecasts from hyperscale customers for 800G products, indicating a potential ramp in demand by the second half of 2025.
- This is a result of the increasing integration of AI-focused data center architectures, which require higher bandwidth solutions.