EL7.AI
StocksMedium•6 November 2026•
3 min read

Applied Optoelectronics revenue jumps 128%, but shares fall 10% after guidance

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Key Facts

1Non-GAAP earnings per share were $0.17, versus an estimate of $0.14, and revenue was $269.87 million, versus $268.11 million.
2Revenue rose 128% year over year to $269.9 million in the third quarter of 2026.
3The company expects fourth-quarter revenue of between $385 million and $420 million, below analysts’ estimate of $427.3 million.
4Shares fell 10% in after-hours trading on Thursday, November 5, 2026.

Applied Optoelectronics reported third-quarter results on November 5, beating analysts’ estimates for earnings and revenue, with sales up 128% year over year. Non-GAAP earnings per share were $0.17, compared with an estimate of $0.14. Revenue reached $269.87 million, versus expectations of $268.11 million. The company also returned to GAAP net income of $6.3 million, or $0.07 per share. That compared with a net loss of $17.9 million in the third quarter of 2025, while the company’s shares fell 10% in after-hours trading following the results and its outlook for the next quarter.

Data center activity was the biggest driver of revenue growth, with sales of $155.6 million, up 254% year over year and 45% from the previous quarter. The company also reported record revenue of $110.9 million from its cable television business. The CEO said revenue had reached a record for the sixth consecutive quarter. Management said it had made progress expanding manufacturing for 800G and 1.6-terabit products to meet demand for optical technologies tied to artificial intelligence. GAAP gross margin was 28.2%, up from 28.0% in the year-earlier quarter, while non-GAAP gross margin declined year over year.

Despite beating third-quarter estimates, the company’s fourth-quarter revenue guidance range fell short of analysts’ expectations. Applied Optoelectronics expects revenue of between $385 million and $420 million, compared with the consensus estimate of $427.3 million. The company forecast non-GAAP earnings per share of between $0.48 and $0.63, versus analysts’ estimate of $0.56. Shares fell 10% in after-hours trading on Thursday following the results and weaker-than-expected revenue guidance. The market reaction came as investors focused on the company’s ability to convert strong demand into sales next quarter, amid raw-material and production-capacity constraints cited by management.

Management said one customer under a long-term agreement shifted its orders from 800G products to 1.6-terabit products faster than the company had expected. It added that shortages of raw materials needed for 1.6-terabit products limited its ability to meet rising demand in the fourth quarter. The company expects these products to begin contributing to revenue in the fourth quarter of 2026, with a larger contribution in 2027. It said 800G products would remain the biggest driver of data center business growth in the near term. Management expects demand for 800G and 1.6-terabit modules to exceed production capacity throughout 2027, making supply availability and manufacturing expansion critical to meeting demand.

On U.S. production capacity, the CFO said the 2027 expansion plan would take longer than planned because of delays in securing electricity and other construction issues. This comes as the company expects demand for data center products to continue exceeding production capacity in 2027. The delay means the increase in U.S. production will not be completed on the schedule the company had targeted. On the earnings call, management linked revenue and profitability growth to strong demand and manufacturing expansion in its data center and cable television businesses. But annual revenue growth did not prevent a decline in non-GAAP gross margin, putting the path to profitability alongside sales growth among the factors investors will monitor next quarter.