Theresa Perrin
Self-Directed Investor & Trader, Former Hospice Nurse
Unusual call buying in Applied Optoelectronics is starting to make sense with shares at $81.50. The New Money App reported $80,000 of $99 calls expiring November 6, 2026, and $290,000 of $340 calls expiring January 21, 2028. x.comÂ
Applied Optoelectronics' possible 2028 revenue makes even a 100% takeover premium too small if it delivers on 2027-28 expectations. Revenue of $6-8B in calendar 2028 at an illustrative 8x multiple would imply about $56B in market value, versus $7B today. That is the upside worth holding out for. x.comÂ
Applied Optoelectronics looks expensive at about 40x 2027 earnings, still trading around $175 as @citrini notes. x.comÂ
Applied Optoelectronics' projected $5.65 billion in 2027 revenue against a $6 billion market cap drives its appeal. It may be the best opportunity in the market right now. x.comÂ
Ongoing demand makes Applied Optoelectronics' risk/reward make a ton of sense at current levels. The price makes little sense if management is credible even a shred; execution could falter, but that risk is, without a doubt, already priced in. x.comÂ
Applied Optoelectronics' Q3 and Q4 would have to be heroic to hit guidance, so a miss could still kill the stock. It trades below projected 2027 sales and much of the risk is already priced in, but that would not eliminate the downside on a miss. x.comÂ
Applied Optoelectronics looks set for its next leg as AI data-center transceiver demand outstrips supply. Q2 EPS was $0.06 versus $0.02 expected and revenue rose 86.3% to $191.92M, a fifth straight record. Management guides to about $1.1B of 2026 revenue as a new Texas facility ramps capacity. The stock has formed a rounding bottom since September and is curling back through its 200 EMA; the trigger is $116.90. x.comÂ
Applied Optoelectronics' case now hinges on visible production progress. Its drop on OpenAI's revenue run-rate figures reflected an accounting question, not any change in laser or memory supply, per Carrio Research. If AAOI fails again next quarter and pushes its timelines out another quarter, it will be ugly. x.comÂ
Applied Optoelectronics' durability beyond the pluggable cycle is in doubt: instead of staying euphoric on pluggable growth, the market is already asking what comes next. It still has a low starting valuation and accelerating fundamentals, but longer-term durability is missing, and the stock failed to bounce hard after a sharp drawdown. x.comÂ
Applied Optoelectronics' drop to $112 is a healthy reset that fills a gap and sets up a bounce off the 200 EMA near $106-107, then a gap higher. Its $600 million ATM is opportunistic raising for hyper-growth, funding US and Taiwan manufacturing as optical demand outpaces supply. It has a multi-billion-dollar 800G deal with an Amazon unit and targets 650,000 transceivers a month by end-2026. Once that capacity yields durable cash flow, per-share earnings should outpace the higher share count. … Show more