NEW YORK, March 3, 2026, 13:39 EST — Regular session
- Applied Optoelectronics dropped 16% at one point, but by the afternoon, shares had trimmed losses to 6.4% lower.
- CFO Stefan Murry highlighted capacity constraints and singled out indium phosphide as a possible choke point for the industry as 800G optics scale up.
- Investors can expect the next update during the OFC session set for March 17.
Shares of Applied Optoelectronics, Inc. (AAOI.O) dropped 6.4% to $95.91 as of 1:39 p.m. EST Tuesday, having touched a session low of $86.06 earlier, with the high for the day reaching $97.58.
For traders betting on the AI data-center rush, the optical components maker has turned into a high-beta play—speed matters as chips, switches, and servers demand faster connections. Even a slight shift in supply expectations can send the stock sharply in either direction.
At a Raymond James investor event Tuesday, CFO Stefan Murry said about two-thirds of Applied Optoelectronics’ business is tied to the data-center market. He expects shipments of 800 gigabit-per-second (800G) transceivers to pick up in the second quarter. Murry flagged “indium phosphide manufacturing capacity is gonna be a critical bottleneck,” repeating the company’s mid-2027 outlook: three hyperscale customers—meaning the largest cloud data-center operators—and around $378 million per month in transceiver revenue for data centers, per the transcript. investing.com
Transceivers — those small boxes that flip electrical signals into light, then back again — are what move data through fiber in massive data centers. The lasers inside? Some use indium phosphide. But if fabs hit capacity limits, the entire supply chain hits a bottleneck.
Optics stocks jumped again Monday following Nvidia’s announcement: $2 billion investments apiece are headed to Lumentum and Coherent, plus fresh multiyear supply deals for next-gen lasers and optical networking gear. “AI has reinvented computing and is driving the largest computing infrastructure buildout in history,” said Nvidia CEO Jensen Huang. nvidianews.nvidia.com
After booking $134.3 million in fourth-quarter revenue, Applied Optoelectronics last week set its sights higher for the first quarter, projecting revenue in the range of $150 million to $165 million. “We have considerable momentum entering 2026, and we believe we are well positioned to accelerate our growth this year,” CEO Thompson Lin said. globenewswire.com
Here’s the pitch: expand capacity, boost shipments of high-speed optics. But as the sector shifts from 400G links to 800G and up to 1.6T, investors are pressing for clarity on when—and at what price—those next waves will really hit the market.
The targets call for a sharp climb, hinging on a handful of major customers following through. If yields falter, qualifications run into trouble, or end-demand softens, Tuesday’s decline could be more than a blip.
Traders are focused on whether supply constraints start to loosen as 800G shipments pick up in the second quarter. They’re also hunting for specifics—where new production lines end up, and just how fast those lines move into operation.
March 17 is the next key date on the calendar. Management is scheduled to hold an investor session in Los Angeles during the Optical Fiber Communication Conference and Exhibition (OFC), and they’ll be webcasting the event.
