Applied Optoelectronics AAOI, which designs and manufactures fiber-optic networking products for internet data centers, cable television, telecommunications and fiber-to-the-home end markets, is benefiting from steady demand for its cable television (“CATV”) products.
In the first quarter of 2026, CATV revenues were $66.8 million, up 24% sequentially, supported by shipments of 1.8 GHz amplifiers to its largest CATV customer and expanding engagement with additional MSOs. For the second quarter, management expects CATV revenues of $75 million to $80 million. Based on recent customer discussions, AAOI now expects to generate more than $325 million annually in CATV, with the majority tied to amplifier deployments and some contribution from software solutions.
Applied Optoelectronics' CATV business is benefiting from ongoing broadband infrastructure upgrades as cable operators expand network capacity to support rising data consumption and faster internet services. The CATV segment also offers AAOI a diversified revenue base, complementing its data center business and helping reduce dependence on a single end market.
Datacenter revenues in the March quarter reached $81.4 million, more than doubling from the year-ago quarter, as customer engagement strengthened around higher-speed optical products. The ramp helped offset a smaller telecom contribution and drove the company’s top line. We note that in the first quarter of 2026, total revenues increased 51.4% year over year to $151.1 million.
Applied Optoelectronics has highlighted accelerating AI-driven datacenter investment as a key demand driver and pointed to strong customer engagement around both 800G transceivers and emerging 1.6 Tb products. The company also said it anticipates sequential revenue growth through 2026, with significantly larger growth expected starting in the third quarter as additional capacity comes online.
Applied Optoelectronics' data center business is benefiting from the rapid expansion of AI infrastructure and cloud computing, which require significantly higher bandwidth and faster optical connectivity. The company supplies high-speed optical transceivers used in hyperscale data centers to connect servers, switches and GPUs, with growing demand for 400G, 800G and next-generation 1.6T solutions.
As cloud service providers continue to invest heavily in AI clusters and network upgrades, AAOI is experiencing stronger order volumes and an improving product mix. Its vertically integrated manufacturing model enables tighter cost control, faster production scaling and greater pricing competitiveness, helping the company capitalize on the industry's transition to higher-speed optical networking.
Taking a Look at Some Other AI Stocks
Micron Technology MU is poised to be the key beneficiary of surging AI-related infrastructure spending, as companies continue to build out GPU clusters and AI data centers that require advanced memory solutions. AI PCs are an important part of Micron’s growth plan. An expanding partner base that includes the likes of NVIDIA, AMD and Intel is enabling Micron to capture a larger share of the AI infrastructure market. Deepening relationships with major cloud and enterprise customers ensures stable revenue streams and reduces the risk of pricing volatility.
Micron’s transformation as a key AI infrastructure supplier, supported by surging AI-driven High Bandwidth Memory or HBM demand, explosive revenue growth, expanding margins, strong cash generation and its Anthropic partnership, provides multiple catalysts for significant upside.
Teradyne TER is benefiting from strong AI-related demand, which is driving significant investments in cloud AI build-out as customers accelerate production of a wide range of AI accelerators, networking, memory and power devices.
The company is being aided by the growing demand for AI infrastructure, which is driving robust growth across its semiconductor test business. Teradyne expects robust growth in the semiconductor test market, particularly in the compute segment, which is projected to expand significantly due to the rapid build-out of AI data centers and the growth of edge AI.
AAOI’s Price Performance, Valuation & Estimates
Shares of AAOI have surged in triple digits (% wise) over the past six months, outperforming the Zacks Electronics - Semiconductors industry’s return.
6-Month Price Comparison
In terms of forward 12-month Price/Sales (P/S), Applied Optoelectronics is trading at a discount compared with its industry.
See how the Zacks Consensus Estimate for AAOI’s earnings has been revised over the past 90 days.
AAOI’s Zacks Rank
AAOI currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Applied Optoelectronics, Inc. (AAOI): Free Stock Analysis Report
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