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Upturn AI Summary - About
Applied Opt(AAOI)
Advisory History & Simulated Performance *
*as per simulation (see disclosures)- ALL
- 1Y
- 1M
- 1W
- BUY Advisory
- SELL Advisory (Profit)
- SELL Advisory (Loss)
- Profit
- Loss
- PASS (Skip)
Stock price based on last close Advisory Performance History (Simulated)
Upturn Advisory & Investor View for AAOI
10/28/2026: AAOI (3-star) is currently NOT-A-BUY. Pass it for now.
Applied Optoelectronics is a specialized manufacturer of high-speed optical networking equipment, serving the data center, cable, and telecommunications markets. The company has a notable position in vertical integration, allowing it to control the production of complex components. Its primary investment story hinges on benefiting from the sustained expansion of AI-driven data center infrastructure. However, the company faces risks related to high customer concentration, cyclical demand patterns, and intense competition from larger, well-funded technology incumbents. Investors should consider that the stock has historically exhibited high volatility and currently provides no dividend, making it better suited for those comfortable with significant risk and industry-specific trends.
How to Read the Upturn Advisory
The Upturn Star Rating and the current BUY, SELL, or PASS advisory are generated by Upturn’s AI advisory engine based on proprietary signal analysis, price behavior, advisory history, and historical signal performance.
Company fundamentals, valuation, risks, and news provide supporting context about the business.
Investor Fit
| Investor style | Fit | Why |
|---|---|---|
| Growth investor | Mixed fit | AAOI offers exposure to high-growth infrastructure trends but carries significant execution and cyclical risk. |
| Momentum investor | Strong fit while signal remains positive | The stock often exhibits high beta and sharp price moves, appealing to momentum traders during periods of industry hype. |
| Value investor | Weak fit | The company's inconsistent profitability and reliance on cyclical demand make it a poor fit for traditional value screens. |
| Dividend investor | Weak fit | The company does not pay a dividend and prioritizes capital reinvestment. |
| Low-risk investor | Weak fit | High volatility and sensitivity to market cycles make this stock unsuitable for low-risk portfolios. |
Risk Profile
| Risk factor | Level | Why it matters |
|---|---|---|
| Price volatility | High | The stock frequently experiences large percentage swings driven by sector news or customer concentration news. |
| Valuation risk | Medium / high | Valuations can be stretched during periods of intense market optimism regarding AI and data center hardware. |
| Competition risk (AI infrastructure competition) | High | The company faces aggressive competition from much larger, well-capitalized firms in the optical transceiver space. |
| Business quality | Medium | While vertically integrated, the company has historically struggled with consistent profitability and operating margins. |
| Dividend income | Low / none | Investors should expect zero income from this stock. |
| Execution risk | High | Successfully managing manufacturing transitions and customer ramp-ups is critical to performance. |
Price Behavior
Rolling Over
The price momentum is slowing down and beginning to turn downward.
Extreme Price Shocks
The stock has experienced exceptionally large and disruptive price movements during the period.
Analysis of Past Performance
Type Stock | Historic Profit 137.89% | Avg. Invested days 24 | Today’s Advisory PASS |
Upturn Advisory Rating  | Upturn Advisory Performance  3.0 | Stock Returns Performance  5.0 |
| Profits based on simulation | Last Close 10/28/2026 |
Upturn Scorecard
Upturn Star Rating 
Company Fundamentals
Financial Health Rating
Growth Momentum Score
Ownership
Top 5 Institutional Investors
Unit Economics (Per $1K Revenue)
Economic Dimensions
Quantitative Style Profile
Style Classification
Quality Focused
Key Highlights
Company Size Mid-Cap Stock | Market Capitalization 6.53B USD | Price to earnings Ratio - | 1Y Target Price 156 |
Price to earnings Ratio - | 1Y Target Price 156 | ||
Volume (30-day avg) 10.4M shares | Beta 3.84 | 52 Weeks Range 18.50 - 233.67 | Updated Date 10/27/2026 |
52 Weeks Range 18.50 - 233.67 | Updated Date 10/27/2026 | ||
Dividends yield (FY) - | Basic EPS (TTM) -0.75 |
How Company Makes Money
| Business area | What it includes | Retail investor read |
|---|---|---|
| Data Center Optical Products | Transceivers used in cloud and AI data center interconnects. | This is the primary growth engine driven by data center infrastructure spending. |
| Broadband Access (CATV) | Lasers and optical gear for cable network upgrades. | A legacy segment that provides foundational revenue but is subject to cyclical demand. |
Analyzing Revenue: Products, Geography and Growth
Revenue by Products
Product revenue - Year on Year
Revenue by Geography
Geography revenue - Year on Year
Earnings Date
Report Date 2026-11-05 | When After Market | Estimate 0.08 | Actual - |
Profitability
Profit Margin -9.57% | Operating Margin (TTM) -12.88% |
Management Effectiveness
Return on Assets (TTM) -2.72% | Return on Equity (TTM) -5.45% |
Valuation
Trailing PE - | Forward PE 84.03 | Enterprise Value 5.91B | Price to Sales(TTM) 10.96 |
Enterprise Value 5.91B | Price to Sales(TTM) 10.96 | ||
Enterprise Value to Revenue 9.91 | Enterprise Value to EBITDA 38.41 | Shares Outstanding 84.91M | Shares Floating 80.86M |
Shares Outstanding 84.91M | Shares Floating 80.86M | ||
Percent Insiders 9.78 | Percent Institutions 63.84 |
Financial Metrics
🧭 Investment Snapshot
Total Revenue (Scale)
Total money earned from selling products or services before any costs. It is needed to understand the scale of the business and its ability to generate income.
Net Income (Profit)
Final profit after all expenses, interest, and taxes are deducted. It is needed to determine the overall profitability available to shareholders.
Free Cash Flow (Cash Strength)
Cash remaining after operating activities and capital expenditures, showing cash available for growth. It is needed to evaluate the company’s ability to invest, pay dividends, or reduce debt.
📈 Growth & Strength
Operating Income (Core Profit)
Profit from core operations after deducting all operating expenses. It is needed to measure how efficiently the company runs its primary business activities.
EBITDA (Cash Earnings)
Earnings before interest, taxes, depreciation, and amortization, indicating operating cash potential. It is needed to compare operating performance across companies without accounting or financing differences.
Gross Profit (Unit Profitability)
Revenue minus cost of revenue, showing profit after direct production costs. It is needed to evaluate core business profitability before overhead expenses.
🛡️ Financial Safety
Cash (Liquidity Buffer)
Total cash and cash equivalents on hand. It is needed to evaluate immediate liquidity and financial flexibility.
Total Debt (Leverage Risk)
Total debt including both short-term and long-term components. It is needed to assess the company’s leverage and financial risk.
Net Working Capital (Short-Term Health)
Current assets minus current liabilities, indicating short-term liquidity strength. It is needed to assess whether the company can meet its short-term obligations.
🧱 Balance Sheet Strength
Stockholder Equity (Net Worth)
Total equity value held by shareholders. It is needed to understand the net worth of the company from the owners’ perspective.
Total Assets (Asset Base)
The full value of everything the company owns, including cash, inventory, equipment, and investments. It is needed to understand the resource base used to generate revenue.
Income Before Tax (Pre-Tax Earnings)
Income before provision for income taxes. It is needed to analyze profitability independent of tax structures.
⚙️ Cost & Drag Factors
Cost of Revenue (Production Cost)
Direct costs required to produce and deliver the products or services sold. It is needed to assess efficiency in production and service delivery.
Total Operating Expenses (Operating Cost)
Indirect costs of running the business such as salaries, marketing, and administration. It is needed to understand how much it costs to sustain ongoing business operations.
Income Tax Expense (Tax Drag)
Amount of taxes paid or payable to the government. It is needed to evaluate the impact of taxation on overall profitability.
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