Applied Optoelectronics, Inc. Q3 2026 Earnings Recap

AOI’s shares rose 6.9% after earnings, with investors likely rewarding record revenue, rapidly growing 800G sales and a multiyear 1.6T agreement with a Tier 1 hyperscaler. The quarter was not an across-the-board beat: gross margin came in below the company’s guidance range, and a construction delay pushes back its capacity expansion.

Key Takeaways

• Q3 revenue was a record $269.9 million, more than double year over year and within the company’s $255 million–$290 million guidance range.
• Non-GAAP gross margin was 28.7%, below the 29%–30.5% guidance range due to product mix; non-GAAP diluted EPS of $0.17 was within guidance of $0.11–$0.26.
• 800G revenue nearly quadrupled sequentially to $47.5 million, while 400G revenue nearly doubled sequentially. The new multiyear agreement with a Tier 1 hyperscaler is entirely for 1.6T transceivers.
• Phase I at the new Sugar Land facility is set to begin operating in December, but Phase II is expected to be delayed by several months, partly because of longer-than-expected electrical-power timelines.
• Management said the delay shifts its target of reaching a $471 million monthly revenue run rate toward the end of 2027; it expects a significant revenue ramp in Q4 and the following quarters.