Sharp selloff. Applied Optoelectronics, Inc. (AAOI) shares dropped 13.3% to $110.09 on Thursday, despite management recently confirming that current 800G and 1.6T demand outpaces production capacity through 2027. The company is rapidly expanding its Texas and Taiwan facilities to support guidance for over $1 billion in 2026 revenue, yet investors appear to be taking profits after the stock’s recent run.
Production constraints overshadow revenue outlook. The catalyst summary indicates management acknowledged that demand for next-generation optical components exceeds what the company can currently produce through at least 2027. While the $1 billion revenue target for 2026 represents substantial growth from Q4 2025’s $134.3 million quarterly run rate, the capacity bottleneck may be tempering investor enthusiasm about near-term upside capture.
Volume surges 83% above average. Trading volume reached 12.2 million shares, running 1.83 times the typical daily average. The elevated activity confirms institutional participation in the selloff, not just retail profit-taking. With a market cap of $8.3 billion, the stock remains a mid-cap play in the optical networking space.
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