# Applied Opt (AAOI.US)

Canonical: https://gigainvestors.com/s/AAOI

Analysis as of: 2026-10-16T07:26:05.741Z. Financial observations: FY2010–FY2026.

Listing currency: USD. Reporting currency: USD.

## Verdict

Not a wonderful business

Quality tests for Buy: not passed (profit record: fail; earnings resilience is evidence only). Published buy qualification: no.

Share price: $83.73 per share; close as of 2026-10-15.

## Checklist

### understandable: fail

- 4 revenue declines in the last 10 years (informational)

- more than 2 net loss years

- negative average operating margin

- operating margin variation exceeds 0.35

- Financial history: 10 years

- Years with declining revenue: 4

- Years with a net loss: 9

- Operating margin variation: 0.97×

Chart: Operating margin; fiscal year observations.

- FY2017: 0.23×

- FY2018: -0.04×

- FY2019: -0.26×

- FY2020: -0.21×

- FY2021: -0.27×

- FY2022: -0.26×

- FY2023: -0.19×

- FY2024: -0.28×

- FY2025: -0.12×

- LTM to Jun 2026: -0.11×

### moat: fail

- ROIC median below threshold

- ROIC worst years below threshold (more than 1 bad year allowed)

- ROIC, median of available years: -10.6%

- ROIC, second-lowest year: -14.8%

- Typical minus recent gross margin: -1.1 pp

- Typical gross margin (annual median): 25.9%

- Recent gross margin (lower of latest and 3-year median): 27.1%

- Years with nonpositive capital: 0

- Capital spending / revenue: 17.1%

- ROIC including acquisitions, ten-year median: -13.5%

Chart: ROIC excluding acquisitions; fiscal year observations.

- FY2016: 10.8%

- FY2017: 25.8%

- FY2018: -2.4%

- FY2019: -11.1%

- FY2020: -10.2%

- FY2021: -12.1%

- FY2022: -14.8%

- FY2023: -11.2%

- FY2024: -15.9%

- FY2025: -6.3%

### economics: fail

- owner earnings cash conversion below threshold

- incremental invested capital return below threshold

- working capital as a share of revenue rose more than 10pp and ends positive

- Cash conversion uses consolidated totals: No

- Owner earnings, five-year total: -$357M

- Net income, five-year total: -$402M

- Return on incremental invested capital: -11.9%

- Working capital / revenue, annual change: 2.7 pp

- Working capital / revenue, change between three-year averages: 18.2 pp

- Working capital / revenue, final three-year average: 46.2%

Chart: Owner earnings · five years; fiscal year observations.

- FY2021: -$39M

- FY2022: -$47M

- FY2023: -$45M

- FY2024: -$187M

- FY2025: -$38M

### management: fail

- Historical market-dollar context (not the management verdict): 2016 to 2025 (9 years)

- potential debt-funded buybacks (informational)

- buybacks leaned toward cheaper years (informational)

- ROIC first 3 years vs last 3 years: 10.8% vs -11.2%

- Per-share earnings: 1.76 to -1.75 (three-year endpoint medians)

- per-share value declined or ends nonpositive

- five-year and ten-year diluted share growth both above threshold

- acquired goodwill and intangibles (proxy) exceeds half of ten-year net income with low and deteriorating ROIC

- Management verdict uses per-share economic progress: Yes

- Ordinary dilution, 10-year annual growth: 13.8%

- Ordinary dilution, 5-year annual growth: 22.4%

- Market cap gain: $2.2B

- Cumulative retained earnings: -$453M

- Diluted shares, 10-year annual growth: 13.8%

- Diluted shares, 5-year annual growth: 22.4%

- $1 test, starting fiscal year: FY2016

- $1 test, ending fiscal year: FY2025

- Per-share value change: -$3.52

- Per-share value, starting three-year median: $1.76

- Per-share value, ending three-year median: -$1.75

- Buybacks concentrated in cheaper years (correlation): 0.32

- Average buyback yield: 0.8%

- Buyback history: 7 years

- Debt-funded buybacks: Yes

- Acquisition spending: $11M

- Cumulative net income, 10 years: -$423M

- ROIC, first three-year median: 10.8%

- ROIC, last three-year median: -11.2%

Chart: Earnings per share; fiscal year observations.

- FY2016: $1.76

- FY2017: $3.67

- FY2018: -$0.11

- FY2019: -$3.31

- FY2020: -$2.67

- FY2021: -$2.01

- FY2022: -$2.38

- FY2023: -$1.75

- FY2024: -$4.50

- FY2025: -$0.64

### accounting: pass

- Sloan accruals exceed 10%

- Sloan accruals: 11.7%

- Receivables to sales index (DSRI): 1.14×

- Restructuring years, last five: 0

- Earnings backed by cash: Yes

- Accounting red flags: 1

- Goodwill and intangibles / equity: 0.00×

Chart: Sloan accruals; fiscal year observations.

- FY2016: -8.0%

- FY2017: -2.3%

- FY2018: -3.5%

- FY2019: -13.8%

- FY2020: -3.0%

- FY2021: -9.4%

- FY2022: -12.8%

- FY2023: -12.4%

- FY2024: -21.4%

- FY2025: 11.7%

## Holders

- [Lee Ainslie](https://gigainvestors.com/mc): tracked 13F investor; follow the investor page for holding quarter and amounts.

- [Dan Davidowitz](https://gigainvestors.com/pcm): tracked 13F investor; follow the investor page for holding quarter and amounts.

## Price story

Down 49% since Apr 2026 · "Applied Optoelectronics CFO Flags Laser Bottleneck as Hyperscalers Push 800G and 1.6T Optics" (finance.yahoo.com, Mar 2026) · sales +30.8%

Story as of 2026-10-16T09:58:12.418Z; price observation 2026-10-15.

- 2025-10-17: AI, Amazon Drive Applied Optoelectronics' $1.9 Billion Revenue Forecast ([finance.yahoo.com](https://finance.yahoo.com/m/1fec36d0-8c9a-3218-9c68-14ae4bebf8cc/ai%2C-amazon-drive-applied.html))

- 2025-11-07: Applied Optoelectronics stock tanks amid soft datacenter revenue, weak Q4 outlook ([seekingalpha.com](https://seekingalpha.com/news/4518317-applied-optoelectronics-stock-tanks-amid-soft-datacenter-revenue-weak-q4-outlook?utm_source=feed_news_all&utm_medium=referral&feed_item_type=news))

- 2025-12-23: Applied Optoelectronics (AAOI) Soars 24.8% on New Pump Laser for AI ([finance.yahoo.com](https://finance.yahoo.com/news/applied-optoelectronics-aaoi-soars-24-163534666.html))

- 2026-02-27: Applied Optoelectronics Soars On Sales Outlook, New Product Manufacturing Ramp ([finance.yahoo.com](https://finance.yahoo.com/m/49501718-98e6-3ce1-a2d6-f01c66a3da28/applied-optoelectronics-soars.html))

- 2026-04-02: Applied Optoelectronics surges 20% as it receives new order for 800G data center transceivers ([seekingalpha.com](https://seekingalpha.com/news/4572398-applied-optoelectronics-surges-20-percent-as-it-receives-new-order-for-800g-data-center?utm_source=feed_news_all&utm_medium=referral&feed_item_type=news))

- 2026-08-18: Applied Optoelectronics Bets on U.S. Laser Capacity to Capture AI Data Center Demand ([finance.yahoo.com](https://finance.yahoo.com/technology/ai/articles/applied-optoelectronics-bets-u-laser-160204361.html))

### Sales · FY2025–2026

sales +30.8%; source https://www.sec.gov/Archives/edgar/data/1158114/000143774926005875/aaoi20251231_10k.htm; observed 2026-02-26.

- FY2017: $382M 

- FY2018: $267M 

- FY2019: $191M 

- FY2020: $235M 

- FY2021: $212M 

- FY2022: $223M 

- FY2023: $218M 

- FY2024: $249M 

- FY2025: $456M 

- FY2026: $596M 

### Gross margin · FY2025

gross margin 30%; source https://www.sec.gov/Archives/edgar/data/1158114/000143774926005875/aaoi20251231_10k.htm; observed 2026-02-26.

- FY2016: 33.4% 

- FY2017: 43.5% 

- FY2018: 32.8% 

- FY2019: 24.2% 

- FY2020: 21.5% 

- FY2021: 17.8% 

- FY2022: 15.1% 

- FY2023: 27.1% 

- FY2024: 24.8% 

- FY2025: 30.0% 

## Owner memo

Memo as of 2026-10-16T08:06:05.509Z.

### How it makes money

Operates in communication equipment; annual sales are USD 455.7 million.

- Source: https://www.sec.gov/Archives/edgar/data/1158114/000143774926005875/aaoi20251231_10k.htm (filed 2026-02-26); FY2025: revenue 455715000; grossProfit 136913000; margin = grossProfit / revenue.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16); AAOI.US: Applied Optoelectronics, Inc. engages in the design, manufacture, and sale of fiber-optic networking products in the United States, Taiwan, and China. The company offers optical modules, optical filters, lasers, laser components, subassemblies, transmitters and transceivers, turn-key equipment, headend, node, and distribution equipment, as well as amplifiers. It sells its products to internet data center operators, cable television, telecom equipment manufacturers, fiber-to-the-home, and internet service providers through its direct and indirect sales channels. Applied Optoelectronics, Inc. was incorporated in 1997 and is headquartered in Sugar Land, Texas.

### Why customers stay

Margins ranged from 24.8% to 30% during 2023–25; it lost 10.6% on its capital.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-26); FY2023: grossProfit / revenue = 27.1%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-26); FY2024: grossProfit / revenue = 24.8%.

- Source: https://www.sec.gov/Archives/edgar/data/1158114/000143774926005875/aaoi20251231_10k.htm (filed 2026-02-26); FY2025: grossProfit / revenue = 30%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-26); 10-year return on capital observations [[2016,0.10769792183245534],[2017,0.25782780534642896],[2018,-0.024152957677696322],[2019,-0.11114772409135383],[2020,-0.10166462029752275],[2021,-0.12126404084215309],[2022,-0.14772359759247697],[2023,-0.11241709569957602],[2024,-0.15889454933284924],[2025,-0.06295244224754783]]; median -0.10640617219443829. ROIC follows the displayed moat series; financial companies use return on tangible equity.

### Where the cash goes

Paid dividends in 4 of 10 years.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-26); FY2016: growth capex 34212634.506277844; upkeep 15776365.493722156; owner earnings 29645634.506277844. Growth capex / owner earnings = 1.1540530360054488.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-26); FY2017: growth capex 49957000; upkeep 20381000; owner earnings 73951000. Growth capex / owner earnings = 0.6755419128882638.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-26); Dividend observations: [[2016,0],[2017,0],[2018,0],[2019,883000],[2020,1080000],[2021,961000],[2022,453000],[2023,0],[2024,0],[2025,0]]. Zero only counted when supported by a complete cash-flow statement.

### Are managers owners

Insiders own 9.8% of the company.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16); AAOI.US SharesStats.PercentInsiders = 9.783999999999999 percentage points; cache date 2026-10-16.

### What could break it

In 2025, 2024 and 2023, its top five customers represented 95.2%, 92.9% and 85.6% of its revenue, respectively.

- Source: https://www.sec.gov/Archives/edgar/data/1158114/000143774926005875/aaoi20251231_10k.htm (filed 2026-02-26); The Company generates much of its revenue from a limited number of customers. In 2025, 2024 and 2023, its top five customers represented 95.2%, 92.9% and 85.6% of its revenue, respectively. In 2025, Digicomm and Microsoft represented 53.1% and 28.8% of its revenue, respectively.

### What the price says

The price is 11.1 times annual sales; cash earnings are negative.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-26); Closing price 83.73 USD; reporting-to-trading FX 1; FY2025 annual sales per share 7.572030746317953; price multiple 11.057799790461145. FY2025 cash earnings/share -0.6351855685466634. Closing-price date 2026-10-15.

## Monthly share-price history (USD per share)

- 2016-10: $19.23 per share

- 2016-11: $24.77 per share

- 2016-12: $23.44 per share

- 2017-01: $30.76 per share

- 2017-02: $45.92 per share

- 2017-03: $56.15 per share

- 2017-04: $49.39 per share

- 2017-05: $69.82 per share

- 2017-06: $61.79 per share

- 2017-07: $97.49 per share

- 2017-08: $59.12 per share

- 2017-09: $64.67 per share

- 2017-10: $40.74 per share

- 2017-11: $43.66 per share

- 2017-12: $37.82 per share

- 2018-01: $32.39 per share

- 2018-02: $27.93 per share

- 2018-03: $25.06 per share

- 2018-04: $31.96 per share

- 2018-05: $46.77 per share

- 2018-06: $44.90 per share

- 2018-07: $38.43 per share

- 2018-08: $41.36 per share

- 2018-09: $24.66 per share

- 2018-10: $19.63 per share

- 2018-11: $20.59 per share

- 2018-12: $15.43 per share

- 2019-01: $17.38 per share

- 2019-02: $13.50 per share

- 2019-03: $12.20 per share

- 2019-04: $12.52 per share

- 2019-05: $8.66 per share

- 2019-06: $10.28 per share

- 2019-07: $10.01 per share

- 2019-08: $8.90 per share

- 2019-09: $11.22 per share

- 2019-10: $9.36 per share

- 2019-11: $10.70 per share

- 2019-12: $11.88 per share

- 2020-01: $11.30 per share

- 2020-02: $8.93 per share

- 2020-03: $7.59 per share

- 2020-04: $10.72 per share

- 2020-05: $8.83 per share

- 2020-06: $10.87 per share

- 2020-07: $14.21 per share

- 2020-08: $11.63 per share

- 2020-09: $11.25 per share

- 2020-10: $8.78 per share

- 2020-11: $8.31 per share

- 2020-12: $8.51 per share

- 2021-01: $11.01 per share

- 2021-02: $9.33 per share

- 2021-03: $8.36 per share

- 2021-04: $7.41 per share

- 2021-05: $8.23 per share

- 2021-06: $8.47 per share

- 2021-07: $7.73 per share

- 2021-08: $7.33 per share

- 2021-09: $7.18 per share

- 2021-10: $7.65 per share

- 2021-11: $5.91 per share

- 2021-12: $5.14 per share

- 2022-01: $4.10 per share

- 2022-02: $3.63 per share

- 2022-03: $3.65 per share

- 2022-04: $2.57 per share

- 2022-05: $2.37 per share

- 2022-06: $1.55 per share

- 2022-07: $1.72 per share

- 2022-08: $2.41 per share

- 2022-09: $2.72 per share

- 2022-10: $2.75 per share

- 2022-11: $2.20 per share

- 2022-12: $1.89 per share

- 2023-01: $2.39 per share

- 2023-02: $2.81 per share

- 2023-03: $2.21 per share

- 2023-04: $1.94 per share

- 2023-05: $2.22 per share

- 2023-06: $5.96 per share

- 2023-07: $6.75 per share

- 2023-08: $13.77 per share

- 2023-09: $10.97 per share

- 2023-10: $7.43 per share

- 2023-11: $13.25 per share

- 2023-12: $19.32 per share

- 2024-01: $15.73 per share

- 2024-02: $15.98 per share

- 2024-03: $13.86 per share

- 2024-04: $9.85 per share

- 2024-05: $10.49 per share

- 2024-06: $8.29 per share

- 2024-07: $9.55 per share

- 2024-08: $11.35 per share

- 2024-09: $14.31 per share

- 2024-10: $15.62 per share

- 2024-11: $41.22 per share

- 2024-12: $36.86 per share

- 2025-01: $27.92 per share

- 2025-02: $21.86 per share

- 2025-03: $15.35 per share

- 2025-04: $12.79 per share

- 2025-05: $15.42 per share

- 2025-06: $25.69 per share

- 2025-07: $22.87 per share

- 2025-08: $24.20 per share

- 2025-09: $25.93 per share

- 2025-10: $35.56 per share

- 2025-11: $26.78 per share

- 2025-12: $34.86 per share

- 2026-01: $43.61 per share

- 2026-02: $84.23 per share

- 2026-03: $84.59 per share

- 2026-04: $164.36 per share

- 2026-05: $158.41 per share

- 2026-06: $148.16 per share

- 2026-07: $94.32 per share

- 2026-08: $107.69 per share

- 2026-09: $99.26 per share

- 2026-10: $83.73 per share

## Annual estimated value (USD per share)

Historical values use today's bond yield for every fiscal year

Historical values use today's FX rate into trading currency for every fiscal year

Historical values use current restated fundamentals and current commodity classification; they are not point-in-time estimates

## Sources

[Original 10-K filing](https://www.sec.gov/Archives/edgar/data/1158114/000143774926005875/aaoi20251231_10k.htm); period 2025-12-31, filed 2026-02-26.

Estimates depend on assumptions and are not guarantees or investment advice. Underlying data remains subject to its source licenses; public reading does not grant bulk redistribution rights.