Applied Optoelectronics, Inc.

Applied Optoelectronics reported Q1 revenue of $151.1 million, up 51% year over year and 13% sequentially, with non-GAAP gross margin of 29.2% versus 30.7% in Q1 2025 and 31.4% in Q4 2025. Non-GAAP loss per share was $0.07, compared with a non-GAAP loss of $0.02 per share in Q1 of the prior year. Data center revenue was $81.4 million, up 154% year over year and 9% sequentially; CATV revenue was $66.8 million, up 4% year over year and 24% sequentially; telecom revenue was $2.6 million, down 13% year over year and 50% sequentially. Q2 revenue is expected to be $180 million to $198 million, with non-GAAP gross margin of 29% to 30% and non-GAAP EPS between a loss of $0.03 and earnings of $0.03. For 2026, management now expects revenue to exceed $1.1 billion and non-GAAP operating income to exceed $140 million.

Thompson Lin framed the quarter as validation that demand from AI infrastructure customers is accelerating, especially for 800G and 1.6T products. He emphasized that the company is deliberately expanding capacity in Texas, with meaningful revenue acceleration expected in the second half of the year as new facilities and equipment come online. His tone was confident and notably more upbeat on long-term demand than on near-term supply, repeatedly stressing that demand is above capacity and that the company is working to catch up.

Stefan Murry focused on execution against guidance, noting Q1 revenue of $151.1 million, gross margin of 29.2%, and non-GAAP EPS of a $0.07 loss all came in within the guided ranges. He highlighted $68.7 million of CapEx in Q1, cash and investments of $449.4 million, debt excluding convertible debt of $77 million, and inventory of $206.2 million, while saying CapEx should be even higher on a quarterly basis going forward. He also cited $1.4 million of direct tariff impact in Q1 and said the company expects at least $5.7 million back from an approved refund application.

Analysts focused heavily on capacity risk, the timing of 800G and 1.6T ramps, and whether the company can execute its aggressive factory buildout. Management said the biggest risk is timing of equipment and qualification, but argued that the work is lower risk because it is an extension of processes already deployed in Asia, with limited labor risk due to automation. On the ELSFP and laser business, management said it is working with several customers on long-term agreements and sees industry-wide indium phosphide shortages persisting, but believes its in-house laser capability and expanded Texas footprint will be a competitive advantage.