Earnings Recap — Q2 FY2026
CY Q3 2026 · Reported August 6, 2026 · Beat 3 of last 6 quarters
Applied Optoelectronics, Inc. reported Q2 FY2026 revenue of $192M, a beat of 0.8% against consensus, and EPS of $0.06, a beat of 296.6%.
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AAOI's results reinforce the AI infrastructure buildout thesis: demand for 800G/1.6T transceivers is outstripping supply, and capacity is the binding constraint. The company's aggressive US manufacturing expansion positions it to benefit from potential reshoring trends and supply chain security concerns. Its in-house laser capability is a strategic differentiator in a market where laser supply is a bottleneck.
Applied Optoelectronics delivered record Q2 revenue of $191.9M, up 86% YoY, driven by strong demand in data center and CATV. Data center revenue grew 140% YoY to $107.7M, with 800G revenue more than doubling sequentially to $12.8M. CATV revenue hit a record $80.6M, up 44% YoY. The company returned to non-GAAP profitability with EPS of $0.06, above guidance. Management noted that demand continues to outpace production capacity through mid-2027, and they are expanding Texas manufacturing capacity significantly.
Management expects Q3 revenue of $255M-$290M (130% YoY growth at midpoint) and non-GAAP EPS of $0.11-$0.26, with gross margin of 29%-30.5%. Full-year 2026 revenue remains around $1.1 billion, constrained by capacity and supply chain rather than demand. 800G revenue is expected to grow nearly 5x sequentially in Q3, with 1.6T shipments beginning late Q3 and ramping in Q4. Capacity is expected to reach over 650K units/month by end of 2026 and over 930K by end of 2027, with over half from Texas. Management reiterated its long-term gross margin target of ~40% and expects continued non-GAAP profitability.
“Demand to support next generation AI infrastructure remains so robust that our near term revenue is bounded almost entirely by production capacity and key component availability.”
on Demand vs. capacity
“We believe that we are and expect to remain the largest manufacturer domestically of optical transceivers for AI. Clearly, anything that heightens interest in that is good for us.”
on US manufacturing advantage
“But even so, let me say that like, I keep emphasize. Lead is not good enough for customer demand. The cost demand is 20% to 40% higher.”
on Demand exceeds capacity
How might a potential US ban on transceivers affect AOI? Does it change capacity planning or customer conversations?
Management said it's early to speculate, but AOI's US manufacturing presence is a key appeal. They noted customers are becoming more aggressive in allocating share to US manufacturers, but capacity is already booked through Q2 next year. They may accelerate capacity additions for US manufacturing.
How should we think about the timing of the $200M 1.6T order?
Deliveries will start very late in Q3 and ramp into Q4, with the bulk delivered in Q4 and a possible tail into Q1. Management emphasized this is just the beginning of significant 1.6T orders from this customer.
How are you feeling about substrate supply and other raw material constraints?
Management said substrate supply is secured into next year and is incrementally better than last quarter. They are working with multiple suppliers in Europe, Japan, and China, and are exploring partnerships or joint ventures to secure supply for 2028-2029.