NEW YORK, Dec. 28, 2025, 3:56 a.m. ET — Market closed
Applied Optoelectronics, Inc. (NASDAQ: AAOI) enters the final trading days of 2025 with a familiar calling card: volatility. The fiber-optics supplier finished Friday’s session at $37.17, down 9.34% on the day, after trading as high as $41.38 and as low as $37.03. Volume came in around 3.83 million shares, marking an abrupt reversal after a powerful run that recently pushed the stock toward fresh highs.
With U.S. stock markets closed for the weekend, investors now have a full news cycle to digest what’s driving the recent whipsaw in AAOI—and what may matter most when trading resumes Monday morning.
The broader market backdrop: thin, post-holiday trading
AAOI’s Friday pullback arrived during a light-volume, post-Christmas session where the major U.S. indexes finished barely changed. The S&P 500 slipped 0.03% to 6,929.94, the Dow edged down 0.04% to 48,710.97, and the Nasdaq fell 0.09% to 23,593.10, according to Reuters. [1]
The Associated Press likewise described the day as light post-holiday trading, with all three major indexes down less than 0.1%. [2]
In that kind of tape—low liquidity, fewer institutional participants, and year-end positioning—high-beta momentum names can swing harder than fundamentals alone might suggest.
What AAOI’s price action is saying after Friday’s drop
Trefis characterized AAOI’s sudden retreat as profit-taking after the stock recently hit a new 52-week high of $41.96, adding that the move appeared to have no specific news catalyst. [3]
Another Trefis note framed the selloff as a renewed burst of investor concern around execution: the company’s Q4 outlook, potential data-center shipment timing issues, and higher operating costs—factors that can resurface quickly when a fast-rising stock stumbles. [4]
Either way, the market’s message is consistent: AAOI is being traded as a high-sensitivity proxy for AI data-center optical demand—and for the company’s ability to scale manufacturing smoothly.
News flow in the last 24–48 hours: mostly analysis, not new corporate headlines
In the past two days, the AAOI-specific headlines have leaned heavily toward market commentary and analyst recap, rather than fresh company press releases:
- Trefis (Dec. 27): Positioned the pullback as technical profit-taking after a 52-week high, while noting the fundamental thesis has been supported by an 800G hyperscaler order. [5]
- Trefis (Dec. 27): Asked whether the drop is temporary or signals deeper cracks, pointing to concerns around the Q4 outlook and data-center shipment timing. [6]
- MarketBeat (Dec. 26): Summarized AAOI’s decline, emphasized mixed analyst sentiment, and highlighted that revenue is growing fast but profitability remains negative. [7]
- MarketBeat (Dec. 27): Reported an institutional filing-related update (Rice Hall James & Associates LLC selling shares) and reiterated a range of Street price targets and ratings. [8]
- Seeking Alpha (Dec. 26): A bullish long-form thesis argued the “breakout” is underappreciated, pointing to 800G progress and capacity ramp expectations; the author disclosed a beneficial long position. [9]
Analyst forecasts: “Hold” consensus, but a wide spread on targets
Wall Street’s view on AAOI remains notably split. MarketBeat’s consensus shows a “Hold” rating based on 7 analysts, with an average 12-month price target of $35.60—about 4% below Friday’s close. The published target range is wide, from $15 on the low end to $50 on the high end. [10]
Several of the most-cited targets and ratings in recent weeks include:
- Rosenblatt Securities: reiterated Buy with a $50 price objective (analyst: Mike Genovese) [11]
- Northland Securities: set a $45 target (analyst: Tim Savageaux) [12]
- Needham & Company: raised its target from $38 to $43 and kept a Buy rating (analyst: Ryan Koontz) [13]
- B. Riley: moved to/maintained a bearish stance with a $15 target alongside a Sell rating (analyst: David Kang) [14]
Separately, Nasdaq-hosted Fintel coverage has also pointed to an upward shift in aggregated price-target math (methodology varies by provider), reflecting how quickly sentiment has swung as AAOI’s AI optics narrative has heated up. [15]
Fundamentals investors are watching: fast revenue growth, profitability still the debate
The fundamental tension in AAOI’s story is straightforward: growth is accelerating, but profits haven’t arrived yet.
MarketBeat’s earnings summary for Q3 2025 shows:
- EPS of -$0.09 (a slight beat versus -$0.10 consensus)
- Revenue up 82.1% year over year to $118.63 million (slightly below consensus) [16]
For Q4, the company issued:
- Revenue guidance of $125 million to $140 million
- EPS guidance of -0.13 to -0.04 [17]
Those ranges matter because AAOI is being valued increasingly like an “AI infrastructure ramp” story. When the market is paying up for a ramp, it tends to punish anything that looks like a slip in timing, yield, or customer conversion.
The product and customer catalysts still underpinning the bull case
Even after Friday’s drop, bulls point to concrete signs that AAOI’s higher-speed data-center products are moving beyond “promise” and into scaling.
Two recent company announcements (earlier this month) are still central to the narrative:
1) First volume order for 800G data-center transceivers
Applied Optoelectronics said it received its first volume order for 800G data center transceivers from a “major hyperscale customer.” CEO Dr. Thompson Lin described the order as a milestone and emphasized AOI’s automated production lines built for high-volume shipments. [18]
2) New 400mW narrow-linewidth pump laser for silicon photonics and CPO
AOI also announced a 400-milliwatt narrow-linewidth pump laser aimed at silicon photonics and co-packaged optics (CPO) needs in AI data centers, highlighting use cases such as closing optical power budgets for 800G/1.6T systems and enabling shared/external laser architectures. [19]
These releases are not “last 48 hours” items—but they remain the load-bearing beams for most bullish analyst notes and weekend commentary.
Positioning and volatility: short interest remains elevated
AAOI’s trading can also be influenced by market mechanics.
MarketBeat’s short-interest data (as of Dec. 15, 2025) shows:
- 12.71 million shares sold short
- About 19.49% of the public float
- 2.5 days to cover [20]
That’s a meaningfully high short position for a mid-cap name—and it can contribute to sharper upside and downside moves when sentiment shifts quickly.
What investors should know before the next session
Because the market is closed right now, the next “real” price discovery for AAOI will likely happen in premarket trading Monday and then at the opening bell.
Key items to watch heading into Monday’s session:
Watch liquidity and spreads early.
Year-end trading can stay thin, and AAOI’s high sensitivity to flows means early prints can look dramatic.
Track whether the stock stabilizes around recent technical reference points.
Trefis highlighted levels around $38–$38.55 as near-term pivots in its discussion of the pullback dynamics. [21]
Keep an eye on the next earnings window.
MarketBeat estimates AAOI’s next earnings date as Feb. 25, 2026 (after market close), based on historical reporting patterns. Between now and then, investors will likely be listening for any incremental signals on 800G ramp velocity, data-center revenue mix, gross margin progression, and manufacturing scale. [22]
Remember the tape behind the stock.
Friday’s broader market finished nearly unchanged in a low-volume session, per Reuters and AP—conditions that can amplify single-stock volatility, especially in high-beta tech. [23]
References
1. www.reuters.com, 2. apnews.com, 3. www.trefis.com, 4. www.trefis.com, 5. www.trefis.com, 6. www.trefis.com, 7. www.marketbeat.com, 8. www.marketbeat.com, 9. seekingalpha.com, 10. www.marketbeat.com, 11. www.marketbeat.com, 12. www.marketbeat.com, 13. www.marketbeat.com, 14. www.marketbeat.com, 15. www.nasdaq.com, 16. www.marketbeat.com, 17. www.marketbeat.com, 18. www.globenewswire.com, 19. www.globenewswire.com, 20. www.marketbeat.com, 21. www.trefis.com, 22. www.marketbeat.com, 23. www.reuters.com
