Applied Optoelectronics (AAOI) Stock Falls 3% After Q3 Guidance Disappoints

TLDR

• AAOI fell 3.4% to $124.22 after issuing Q3 2026 EPS guidance of $0.11–$0.26, below the $0.27 analyst consensus
• Q3 revenue guidance of $255M–$290M brackets the $265.7M consensus estimate
• Q2 revenue hit a record $191.9M, up 86% year-over-year, beating estimates
• Needham cut its price target from $220 to $190 but kept a Buy rating
• Insiders sold over 506,000 shares worth $87.4M in the past 90 days

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Applied Optoelectronics (AAOI) stock dropped 3.4% to $124.22 on Thursday after the company issued Q3 2026 guidance that came in below Wall Street expectations on earnings per share.

Applied Optoelectronics, Inc., AAOI

The company guided for Q3 EPS of $0.11 to $0.26, compared to the analyst consensus of $0.27. Revenue guidance of $255M to $290M bracketed the $265.7M consensus.

Despite the guidance miss, Q2 results were solid. AAOI posted record revenue of $191.9M for the quarter, up 86% year-over-year and 27% from Q1. It was the fifth consecutive quarter of record sales.

APPLIED OPTOELECTRONICS $AAOI Q2’26 EARNINGS HIGHLIGHTS

🔹 Revenue: $191.9M (Est. $190M) 🟢; +86% YoY
🔹 Adj. EPS: $0.06 (Est. $0.01) 🟢
🔹 Non-GAAP Net Income: $5.5M (Est. $1.7M) 🟢

Q3 Guide:
🔹 Revenue: $255M-$290M (Est. $278M) 🟡
🔹 EPS: $0.11-$0.26 (Est. $0.28) 🔴
🔹 Net… pic.twitter.com/2L0X4Y0FeP

— Wall St Engine (@wallstengine) August 6, 2026

Adjusted EPS came in at $0.06, beating the $0.02 consensus by $0.04. So the quarter itself wasn’t the problem. It was the outlook that rattled investors.

Guidance and Margin Targets

The company pushed out its gross margin targets by one to two quarters. That delay caught some analysts off guard.

The 1.6T product ramp is now expected in Q4, delayed due to tight digital signal processor supply. That product sits behind a $200M hyperscale order, making the timing more consequential.

AAOI did maintain its full fiscal 2026 revenue guidance, pointing to a steep Q4 ramp to make up the difference.

200G and 400G product sales jumped 440% year-over-year in Q2. Amazon made up roughly 25% of total revenue. The company is also growing shipments of 800G products.

Analyst Reaction

Needham cut its price target from $220 to $190 but held its Buy rating. The firm modestly trimmed its fiscal 2026 and 2027 estimates following the softer Q3 outlook.

Rosenblatt Securities has a Buy rating with a $220 target. Raymond James holds an Outperform rating. Two analysts carry Sell ratings, including Weiss Ratings and Wall Street Zen.

The consensus rating across six analysts sits at Hold, with an average price target of $141.80.

On the insider front, CFO Stefan Murry sold 33,000 shares in May at $173.26, a transaction tied to tax withholding on equity awards. Director Cynthia Delaney sold 56,575 shares in late May at $189.23, reducing her stake by nearly 49%.

In total, insiders sold 506,215 shares worth $87.4M over the past 90 days. Company insiders now own 3.80% of the stock.

Institutional investors and hedge funds hold 61.7% of AAOI. Recent buyers include Persistent Asset Partners, State Board of Administration of Florida Retirement System, and Creative Planning.

AAOI has a 52-week range of $18.50 to $233.67. The stock’s 50-day moving average sits at $138.69, and the 200-day at $117.41.

The stock has returned roughly 456% over the past year, though some analysts flag it as overvalued relative to fair value estimates.

Needham lowered Q3 EPS estimates to reflect the updated guidance, citing the delayed margin timeline and DSP supply constraints as the primary factors.