Applied Optoelectronics (AAOI) Valuation After 800G Hyperscale Order And Growing AI Data Center Interest

Simply Wall St.01-06

Applied Optoelectronics (AAOI) attracted fresh attention after shares climbed 13.6% on the first trading day of 2026, following a volume order for its 800G data center transceivers from a hyperscale ...

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See our latest analysis for Applied Optoelectronics. The recent 13.6% jump ties into a wider rebound, with a 31.59% 1 month share price return and a very large 3 year total shareholder return, suggesting momentum has picked up after weaker short term moves. If AI related demand for optics has your attention, this could be a useful moment to size up other high growth tech and AI stocks that are catching investors’ eyes. With the shares now close to the US$36 analyst target, a 31.59% 1 month return, and a very large 3 year total shareholder return already on the board, is there real upside left here or is the market already pricing in future growth? AdvertisementMost Popular Narrative: 14.3% Overvalued With Applied Optoelectronics last closing at US$34.99 against a narrative fair value of about US$30.60, the current price sits above that modeled estimate and leans on optimistic assumptions about execution and future cash generation. Ongoing expansion and ramp-up of domestic (U.S.) and Taiwan-based manufacturing for advanced transceivers, with capacity expected to increase more than 8x by year-end and major customers requiring U.S.-based production, provides a competitive edge and reduces tariff/supply chain risks. This supports higher future revenue visibility and potential margin stability. Read the complete narrative. Curious what kind of revenue surge, margin reset, and future earnings multiple need to line up to support that fair value math? The narrative leans on aggressive growth compounding into a very different profit profile. Want to see exactly how those building blocks stack up and what time frame they assume? Result: Fair Value of $30.60 (OVERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, the story can quickly change if heavy capital spending strains cash flow or if any of those highly concentrated customer relationships start to weaken. Find out about the key risks to this Applied Optoelectronics narrative.  Build Your Own Applied Optoelectronics Narrative If you interpret the numbers differently or want to test your own assumptions, you can build a personalized AAOI story in just a few minutes by starting with Do it your way. A great starting point for your Applied Optoelectronics research is our analysis highlighting 1 key reward and 2 important warning signs that could impact your investment decision. Looking for more investment ideas? If AAOI has you thinking about what else might be on your radar, this is a good moment to line up a few more potential candidates.  Spot underappreciated businesses by scanning these 880 undervalued stocks based on cash flows that the market may be pricing conservatively based on their current cash flows and fundamentals. Target future focused themes by checking out these 25 AI penny stocks that are tied to artificial intelligence and broader data centric growth trends. Hunt for regular income by reviewing these 14 dividend stocks with yields > 3% that already offer yields above 3% and may complement growth focused positions.   This article by Simply Wall St is general in nature. We provide commentary based on historical data\n    and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your\n    financial situation. We aim to bring you long-term focused analysis driven by fundamental data.\n    Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.\n    Simply Wall St has no position in any stocks mentioned.New: Manage All Your Stock Portfolios in One PlaceWe've created the ultimate portfolio companion for stock investors, and it's free.• Connect an unlimited number of Portfolios and see your total in one currency• Be alerted to new Warning Signs or Risks via email or mobile• Track the Fair Value of your stocksTry a Demo Portfolio for FreeHave feedback on this article? Concerned about the content? Get in touch with us directly. 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