Applied Optoelectronics Reports 127% Revenue Growth Amid Margin Stagnation
Applied Optoelectronics (AAOI) reported a significant surge in third-quarter revenue, reaching $269.9 million, a 127% increase year-over-year driven primarily by a tripling of datacenter sales. Despite this top-line growth, the company's gross margin remained largely stagnant at approximately 28%, and operating losses persisted despite a GAAP net income boost fueled by unspecified 'other income.' Market reaction was negative, with shares falling significantly in after-hours trading. While fourth-quarter revenue guidance suggests continued momentum with a projected 49% increase over the current quarter, investors are concerned about profitability scaling alongside sales. Additionally, delays in US manufacturing capacity expansion due to electrical power and construction issues have introduced uncertainty regarding long-term production targets for 2027.