Applied Optoelectronics Inc. Common Stock (AAOI)

FairStock Score: 33/100 — RISKY

Key Financials

AI Analysis

AI-generated, general educational analysis — not personal investment advice.

I look for businesses that earn consistent profits and sell at sensible prices. Applied Optoelectronics fails the first test. Revenue has climbed: $217.6M in FY2023, $249.4M in FY2024, and $455.7M in FY2025. In fiscal Q2 2026, the quarter ended 2026-06-30, revenue was $191.9M versus $103.0M in fiscal Q2 2025, the quarter ended 2025-06-30, so demand is real. But net loss in fiscal Q2 2026 was $22.8M, wider than the $9.1M loss in fiscal Q2 2025. FY2025 net loss was $38.2M, FY2024 was $186.7M, and FY2023 was $56.0M. FairStock's Lynch category is none because the company lost money in each of the last four years. The moat is not evident: optical modules are competitive, and trailing free cash flow was -$601.3M, a -7.3% FCF yield. FairStock calculations show P/E -126.99, P/B 4.95, ROE -5.45%, ROCE -2.72%, Piotroski 3/9, and FairStock Score 33/100. Debt/equity of 0.18 and Altman Z-Score of 7.96 offer some balance-sheet cushion, but cash burn is heavy. At the $97.78 close on 2026-10-13, market cap is $8.3B, beta is 3.78, and the 52-week range is $18.50 to $233.67. I see a speculative growth story, not a Graham bargain. Until profits and free cash flow turn positive, I cannot call it a sound value.

In plain English: Applied Optoelectronics makes fiber-optic networking parts used in data centers and telecom networks. Sales are growing quickly, but the company has lost money for years and is still losing money, so the business looks weak on profits. At the 2026-10-13 close of $97.78, its $8.3 billion market value looks expensive for a company that does not make a profit and spends more cash than it brings in.

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Data as of 2026-10-13 close · note generated 2026-10-15 · model deepseek-flash

Sources (SEC EDGAR): fiscal Q2 2026 10-Q (period ended 2026-06-30) · fiscal Q1 2026 10-Q (period ended 2026-03-31) · fiscal Q3 2025 10-Q (period ended 2025-09-30) · fiscal Q2 2025 10-Q (period ended 2025-06-30) · FY2025 10-K (period ended 2025-12-31) · FY2024 10-K (period ended 2024-12-31) · FY2023 10-K (period ended 2023-12-31)

Fundamentals from company filings and market-data providers; prices are end-of-day, not real-time. AI-generated analysis is general and educational — not personal investment advice. Scoring methodology · Score test · Disclaimer