A Look at Applied Optoelectronics's Valuation Following Its 100G VCSEL Technology Reveal at ECOC 2025

Applied Optoelectronics (AAOI) is set to showcase its 100G VCSEL technology within an 800G optical transceiver during ECOC 2025 in Copenhagen, Denmark. This move highlights AOI’s vertically integrated manufacturing and aims at next-generation short-reach connectivity.

See our latest analysis for Applied Optoelectronics.

AOI’s push into 100G VCSELs is grabbing headlines, but the real story is its momentum. Despite a sharp drop earlier this month, the 1-year total shareholder return stands at nearly 58%, and the three-year total return tops 900%, hinting at both persistent volatility and strong long-term performance.

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With excitement around AOI’s latest technology, investors may be wondering if the stock is offering hidden value after its recent run, or if future growth has already been fully priced in by the market.

Most Popular Narrative: 7% Overvalued

With the current analyst narrative fair value at $27.20 and Applied Optoelectronics’ last close at $29.10, the stock sits above the consensus target. Here is a glimpse at the key driver behind this assessment.

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, supporting higher future revenue visibility and potential margin stability.

Read the complete narrative.

Curious what is fueling this optimism? This narrative hinges on a bold acceleration in future revenue, overhauled profit margins, and a multiple that rivals the industry’s biggest winners. Ready to uncover the ambitious assumptions that aim to justify this premium valuation? The financial projections may surprise you.

Result: Fair Value of $27.20 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, heavy reliance on just a few large customers and ongoing high capital spending pose real hurdles that could upend these optimistic projections.

Find out about the key risks to this Applied Optoelectronics narrative.

Build Your Own Applied Optoelectronics Narrative

If this perspective doesn’t match your take, or if you want to dig into the numbers yourself, you can craft your own story in just a few minutes. 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.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data 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 financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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