Applied Optoelectronics sinks after Q1 sales miss, underwhelming Q2 revenue guidance

Applied Optoelectronics tumbled after-hours after the connectivity company reported lower-than-expected Q1 sales and underwhelming revenue guidance.

Here are the numbers:

• Revenue of $151.1 million (compared to analyst estimates of $157.5 million).

• An adjusted loss per share of $0.07 (estimate: a $0.05 loss).

• An adjusted gross margin of 29.1% (estimate: 30.37%).

The company helps servers in large-scale data centers relay information, partnering with companies like Microsoft and Amazon. Last month, the stock surged after news broke that a key hyperscale customer, following an initial order, had significantly increased its demand for AAOI’s offerings.

For second quarter of 2026, the company expects:

• Revenue in the range of $180 million to $198 million (estimate: $196.83 million).

• Adjusted gross margin in the range of 29% to 30% (estimate: 31.42%).

In the press release, AAOI Chief Financial and Strategy Officer Dr. Stefan Murry said:

“Our focus remains on ramping our capacity thoughtfully to meet the unprecedented demand and are confident in our ability to execute on our ambitious growth plans, while ensuring reliability, quality, and a dedication to excellence.”

Demand for photonics does not seem to be in question, but judging by Lumentum’s post-earnings call on Tuesday and Applied Optoelectronics’ commentary, the challenge lies in securing supply.

AAOI was up nearly 300% since the beginning of the year before this print.