Applied Optoelectronics (AAOI.US) reported its first-quarter 2026 financial results after the market closed on Thursday, falling short of market expectations and causing its stock to drop sharply by more than 15% in after-hours trading. As of the latest update, the stock was down 8.32%. Notably, both the company's first-quarter performance and its second-quarter revenue and earnings per share (EPS) guidance were below market forecasts. During the regular trading session, the stock had already declined by 11.76%.

For the quarter ended March 31, the fiber-optic networking company reported an adjusted loss per share of $0.07, worse than the market expectation of a $0.05 loss per share. First-quarter revenue increased by 51% year-over-year to $151.1 million but missed the anticipated $154.81 million. The revenue shortfall was primarily attributed to the data center business, which generated $81.4 million, falling short of the expected $91.4 million. The adjusted gross margin for the quarter was 29.2%, below the projected 30.4%.

Looking ahead to the second quarter, the company expects revenue in the range of $180 million to $198 million, with a midpoint of $189 million, which is below the market consensus of $196 million. It forecasts an adjusted EPS between a loss of $0.03 and a profit of $0.03, significantly lower than the expected $0.07. The projected adjusted gross margin is anticipated to be between 29% and 30%.

Dr. Thompson Lin, Founder and Chief Executive Officer, commented, "We continue to see strong customer demand for our 800G optical modules and 1.6T products, particularly driven by accelerated data center investments fueled by AI. Notably, this quarter we completed the first volume shipment of 800G products to a major hyper-scale customer. Looking forward, we expect 800G product volumes to ramp starting in the second quarter, with revenue growing sequentially throughout the year. As additional capacity comes online in the third quarter, we anticipate a significant acceleration in growth."

Applied Optoelectronics, Inc. is a manufacturer of fiber-optic networking products headquartered in Sugar Land, Texas. The company converted from a Texas corporation to a Delaware corporation in March 2013 and began trading on the Nasdaq in September of the same year. Originally focused on the cable television Fiber-to-the-Home (FTTH) market, a key differentiator for the company is its full in-house manufacturing capability for its indium phosphide (InP) laser chips—from semiconductor crystal growth and laser chip processing to final transceiver module assembly—achieving end-to-end vertical integration, which is relatively rare in the predominantly fabless optical communications industry.