Applied Optoelectronics Restores GAAP Profit on Record Sales

The Tip Desk · November 6, 2026 · 2 min read

GAAP revenue reached $269.9 million in the third quarter as the company guided fourth-quarter sales to $385 million to $420 million.

Applied Optoelectronics, Inc. (AAOI), a maker of optical and HFC networking products for AI datacenters, reported GAAP revenue of $269.9 million for the third quarter ended September 30, 2026, up from $191.9 million in the second quarter and $118.6 million a year earlier. The company said the result was a sixth consecutive quarter of record revenue and that growth was accelerating.

GAAP results flipped to net income of $6.3 million, or $0.07 a share, from a net loss of $22.8 million, or $0.28 a share, in the second quarter. Non-GAAP net income was $14.8 million, or $0.17 a share, compared with $5.5 million, or $0.06 a share, in the prior quarter.

Founder, President and Chief Executive Officer Dr. Thompson Lin said the company returned to GAAP profitability and had made progress scaling manufacturing for 800G and 1.6T products. Chief Financial Officer Dr. Stefan Murry said the quarter was driven by demand and manufacturing expansion in both datacenter and CATV.

Datacenter revenue was $155.6 million, compared with $43.9 million in the third quarter of 2025. CATV revenue was $110.9 million, versus $70.6 million a year earlier. Telecom contributed $2.7 million and other $0.7 million. Adjusted EBITDA was $28.5 million, compared with $2.0 million a year earlier.

GAAP gross margin was 28.2%, compared with 27.7% in the second quarter. Non-GAAP gross margin was 28.7%, down from 29.8% in the second quarter.

The company said it recently secured a multi-year strategic agreement with a Tier 1 hyperscale datacenter customer. Total manufacturing equipment capacity was approaching 330,000 units per month. AOI said it now expects to have equipment installed to produce over 500,000 pieces of 800G and 1.6 Tb products per month by the end of 2026, and to grow capacity to over 1 million pieces of those transceivers per month by the end of 2027. It said the 2027 U.S. expansion plan would take longer than expected because of longer-than-expected time to obtain electrical power among other construction issues.

For the fourth quarter of 2026, AOI expects revenue of $385 million to $420 million, non-GAAP gross margin of 29.5% to 31%, and non-GAAP net income of $45.9 million to $60.4 million, or $0.48 to $0.63 a share using about 96 million shares.

Cash, cash equivalents and restricted cash were $621.5 million at September 30, 2026, compared with $216.0 million at December 31, 2025. Inventories were $378.0 million. Property, plant and equipment, net, was $1.04 billion.