Can Applied Optoelectronics (AAOI) Redefine Data Center Economics With Its New 100G VCSEL Transceiver?

• At ECOC 2025 in Copenhagen, Applied Optoelectronics showcased its 800G OSFP 2xSR4 multimode optical transceiver built on proprietary 100G VCSEL technology, targeting cloud, data center, and AI/ML cluster applications.
• The company's vertically integrated design and ability to deliver cost-efficient, low-power multimode links positions it to meet growing short-reach connectivity demands in hyperscale environments.
• We'll examine how the launch of this multimode transceiver utilizing 100G VCSEL technology could influence AOI's investment narrative and future prospects.

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Applied Optoelectronics Investment Narrative Recap

Owning Applied Optoelectronics stock starts with believing that rapid AI-driven bandwidth demand and a shift to high-speed optical links will fuel sustained growth, while the company’s heavy reliance on a few major customers and its need to scale new technologies efficiently remain central risks. The introduction of the 800G OSFP 2xSR4 multimode transceiver is aligned with the ongoing adoption and ramp-up of next-generation products by cloud and data center customers, yet this specific launch does not fundamentally alter the near-term catalyst, which remains broad-based qualification and volume shipments of AOI’s high-capacity transceivers. Among recent news, the completion of follow-on equity offerings totaling over US$249 million stands out, as it enhances liquidity to support growth but also brings dilution, a factor investors are closely monitoring alongside operational progress. However, those focused on margin improvement must also be aware of...

Read the full narrative on Applied Optoelectronics (it's free!)

Applied Optoelectronics' outlook calls for $1.3 billion in revenue and $111.0 million in earnings by 2028. This scenario relies on a 51.5% annual revenue growth rate and a $266.7 million increase in earnings from the current level of -$155.7 million.

Uncover how Applied Optoelectronics' forecasts yield a $27.20 fair value, a 3% downside to its current price.

Exploring Other Perspectives

Seven individual fair value estimates from the Simply Wall St Community place AOI’s worth between US$27.20 and US$75.38 per share. With revenue growth forecasts still high, it is worth considering how customer concentration risk could affect future results as the company executes on new product cycles.

Explore 7 other fair value estimates on Applied Optoelectronics - why the stock might be worth just $27.20!

Build Your Own Applied Optoelectronics Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• 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.
• Our free Applied Optoelectronics research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Applied Optoelectronics' overall financial health at a glance.

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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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