Applied OptoelectronicsAAOI is benefiting from robust growth in both the datacenter and CATV (cable TV) markets, positioning itself as a formidable competitor against industry peers like LumentumLITE and CoherentCOHR. In the second quarter of 2026, Datacenter revenues reached $107.66 million, up 140.4% year over year and 32.3% sequentially. The business accounted for 56% of total revenues, supported by stronger shipments of high-speed optical transceivers used in AI-focused infrastructure.
When compared to competitors like Lumentum and Coherent, AAOI stands out due to its aggressive expansion of U.S.-based manufacturing capacity. The company’s Texas footprint now exceeds 1.6 million square feet, with new facilities dedicated to high-speed transceiver production coming online. Manufacturing capacity for 800G and 1.6T products is expected to ramp up from 200,000 units per month to over 650,000 by year-end, and to 930,000 by the end of 2027. This expansion is critical, as current and forecasted demand for AAOI’s products continues to outpace supply, with customer orders already booked well into next year.
In the CATV segment, AAOI achieved record revenues of $80.6 million in the second quarter of 2026, up 43.8% year over year, and secured major wins such as being selected by Mediacom for DOCSIS 4.0 network upgrades. The company’s QuantumLink software and next-generation amplifiers are gaining traction with multiple system operators, providing a diversified revenue base and reducing reliance on any single market segment. AAOI expects CATV revenues to be between $100 million and $110 million in the third quarter of 2026 and expects to generate over $325 million annually in this segment.
While Lumentum and Coherent remain formidable competitors with established customer bases and technology portfolios, AAOI’s strong momentum in datacenter and CATV markets, combined with its strategic manufacturing expansion and product innovation, gives it a competitive edge. For the third quarter of 2026, Applied Optoelectronics expects revenues between $255 million and $290 million.
AAOI Faces Stiff Competition
Applied Optoelectronics is facing stiff competition from Lumentum and Coherent in the optical networking market.
Lumentum is benefiting from strong demand for its optical components and systems, driven by the industry shift to AI workloads and increased data center connectivity. Key growth drivers include record shipments of 800G and next-generation 1.6T cloud transceivers, strong momentum in pump and EML laser sales, and successful ramp-up of new technologies like near-packaged optics and co-packaged optics.
Coherent is benefiting from the strong demand in AI data center and communications markets, leading to record revenues and accelerated growth. Key drivers included strong customer bookings, expansion of production capacity, especially in 6-inch indium phosphide output, and the ramp-up of new products like advanced transceivers and optical circuit switching systems.
AAOI’s Share Price Performance, Valuation, and Estimates
Applied Optoelectronics shares have skyrocketed 273.1% in the year-to-date period, outperforming the Zacks Computer & Technology sector’s rise of 18.2% and the Zacks Electronics - Semiconductors increase of 35%.
AAOI Stock’s Performance
Image Source: Zacks Investment Research
Applied Optoelectronics shares are currently overvalued, as suggested by its Value Score of F. AAOI stock is trading at a premium with a trailing 12-month Price/Sales of 6.44X compared with the Electronics - Semiconductors industry’s 5.41X.
AAOI’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for 2026 earnings is pegged at 80 cents per share, which has been unchanged over the past 30 days. This suggests 407.69% year-over-year growth.
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