AAOI Shares Plunge 3.3% as Trading Volume Surges 84.58% to 270 Million Ranks 366th in Market Activity

On August 8, 2025, Applied Optoelectronics (AAOI) closed down 3.31% with a trading volume of $270 million, marking an 84.58% surge from the previous day. The stock ranked 366th in trading activity across the market.

AAOI reported Q2 2025 results highlighting mixed fundamentals. The company achieved $103 million in revenue, driven by 30% year-over-year growth in data center products and an 80% rise in CATV product sales. Non-GAAP gross margin stabilized at 30.4%, aligned with guidance, as production efficiency gains offset cost pressures. Strategic investments in 800G and 1.6 terabit transceiver development advanced, with meaningful shipments expected in H2 2025. Expansion plans for advanced transceiver manufacturing in the U.S. and Taiwan aim to reach 200,000 units monthly by mid-2026. A $2 million Texas-based incentive further supports domestic production initiatives.

Challenges emerged in profitability and liquidity. A non-GAAP net loss of $8.8 million ($0.16/share) fell short of guidance due to elevated operating expenses from R&D and SG&A investments. Strengthening Taiwan dollar costs also impacted margins. Receivables swelled as extended payment terms were adopted to sustain revenue growth, raising cash flow concerns. Long-term gross margin targets of 40% remain distant, with current transceiver margins below 30% and cable TV margins in the low-to-mid 30% range.

Management emphasized progress in customer qualifications for 400G/800G products, with three tier-one engagements active. Silicon photonics and EML integration in data center production are expected to drive margin expansion. A node product launch is slated for Q4 2025, with revenue projected by Q1 2026. Despite near-term hurdles, the company anticipates mid-30% gross margins by late 2025, with 40% as a long-term goal.

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