Applied Optoelectronics, Inc.

Q2 revenue was $191.9 million, up 86% year over year and 27% sequentially. Non-GAAP gross margin was 29.8%, compared with 29.2% in Q1 2026 and 30.4% in Q2 2025. Non-GAAP EPS was $0.06 versus guidance for a loss of $0.03 to earnings of $0.03, and GAAP EPS was a loss of $0.28. Data center revenue was $107.7 million, up 140.4% year over year and 32.3% sequentially; CATV revenue was $80.6 million, up 43.8% year over year and 20.6% sequentially. Q3 guidance calls for revenue of $255 million to $290 million, non-GAAP gross margin of 29% to 30.5%, and non-GAAP EPS of $0.11 to $0.26. Management kept full-year 2026 revenue guidance at around $1.1 billion.

CEO Chih-Hsiang Lin framed the quarter as a strong execution story, saying AOI delivered record revenue, returned to non-GAAP profitability, and benefited from robust demand in both data center and CATV. His tone was highly optimistic about AI infrastructure demand, repeatedly saying near-term revenue is limited more by capacity and components than by demand. He emphasized AOI’s U.S. manufacturing buildout, in-house laser capability, and the expectation that 800G will drive near-term growth before 1.6T ramps more meaningfully later.

CFO Stefan J. Murry highlighted that Q2 revenue of $191.9 million and non-GAAP gross margin of 29.8% landed within guidance, while non-GAAP EPS of $0.06 beat expectations. He noted non-GAAP operating expenses were $67.6 million, above plan mainly due to shipping costs tied to the CATV ramp and higher R&D for 800G/1.6T qualifications, and said OpEx should run $70 million to $80 million per quarter. He also pointed to $508.8 million in cash, cash equivalents, short-term investments and restricted cash, $92.8 million in debt excluding convertible debt, $278.8 million in inventory, $565.5 million in capital investments in Q2, and $538.8 million raised net from the ATM program.

Analysts focused on two main issues: potential U.S. restrictions on transceivers from China and whether AOI can actually meet surging 800G/1.6T demand. Management said any policy change is still too speculative to quantify, but that AOI’s U.S.-based manufacturing should only improve its appeal, especially with customers emphasizing domestic supply. They also said demand is not the problem; capacity and material supply are, with 100G temporarily weaker due to memory-related switch shortages, and 1.6T deliveries expected to begin late in Q3 and ramp in Q4.