Applied Optoelectronics (AAOI) Q3 2026: revenue up 127% to $269.9M, back to a GAAP profit

$AAOI reported revenue of $269.9M for the third quarter, up 127% from a year ago and 41% from June, a sixth record quarter in a row and inside its own $255M to $290M guide. Datacenter revenue grew 254% to $155.6M, and the company swung to a GAAP net income of $6.3M from a $22.8M loss in the June quarter. This recap walks the print, the guide, the capacity plan, the cash, the read across the Networking / Optical bubble and what to watch next, against our /stocks/aaoi thesis.

The print

$AAOI reported the quarter ended September 30, 2026.

What moved the numbers:

• Datacenter. $155.6M against $107.7M in the June quarter, now 58% of revenue. Management credits the scaling of its 800G and 1.6T manufacturing.
• CATV. A record $110.9M, up 38% from $80.6M in June: the cable business is growing too, so the mix is still far from all-AI.
• Against the guide. $269.9M sits inside the $255M to $290M the company gave in August, a little under the $272.5M midpoint.
• The profit line. Operating loss was $1.4M; the GAAP profit comes from $10.1M of other income ($8.2M other income, net, and $3.1M interest income) before a $2.4M tax charge.

The guide

The revenue range is 43% to 56% above the third quarter (our arithmetic), and the margin range is above the 28.7% just reported. The share count used for the guide, about 96M, compares with 87.8M diluted shares in the third quarter. These are company guides, not results.

The capacity plan

The CFO puts the company's manufacturing equipment capacity at close to 330,000 units a month today. The targets in the release:

• End of 2026: enough equipment installed to produce over 500,000 pieces of 800G and 1.6T products a month.
• End of 2027: over 1 million 800G and 1.6T transceivers a month.
• The delay. The 2027 expansion in the US is now expected "to take longer to complete", because obtaining the necessary electrical power is taking longer than expected, "among other construction related issues".

The cash

• Cash, cash equivalents and restricted cash of $621.5M at September 30, from $216.0M at December 31; additional paid-in capital rose by $1.53B over the same nine months, the equity sold to fund the build.
• Property, plant and equipment of $1.04B, from $376.1M; other assets rose to $467.7M from $58.5M.
• Working capital swings. Inventories doubled to $378.0M, receivables rose to $413.8M and accounts payable to $494.3M.
• Debt. $128.8M of convertible notes, plus a new $200M credit facility signed on October 30 with East West Bank ($170M of term loans for equipment, $30M revolving), which replaced the prior facility (8-K of November 4).

Networking / Optical read-through

The standing QA thesis on /stocks/aaoi is an 800G transceiver vendor riding hyperscaler datacenter builds, with a mix only half AI, a history of losses, heavy concentration on Amazon and dilution as the structural overhang.

• Demand. Datacenter revenue up 254% and a Q4 guide another 43% to 56% higher: the 800G ramp is the part of the thesis the filing confirms.
• Profitability. Back to a GAAP profit ("returned to GAAP profitability", per the CEO), but gross margin is flat at 28% while volumes more than doubled; the guide asks for 29.5% to 31% next quarter.
• Dilution. Still the overhang: the guide is built on about 96M shares, against 63.3M a year earlier.
• Peers. Coherent's print on November 4 showed the same datacenter demand at a far larger scale (Datacenter and Communications up 79%).

Net read: demand and the guide moved forward; margins and the US build did not.

Peer reaction

$AAOI's closest correlated names in the QA universe over 252 days include $COHR (0.72) and $LITE (0.70), both optical names. The release came after the close, so the session reaction was not established when this recap was written.

What worked

• Revenue up 127% to a sixth consecutive record, inside the guide.
• Datacenter revenue up 254%, CATV at a record $110.9M.
• A GAAP net income of $6.3M and adjusted EBITDA of $28.5M.
• A Q4 guide of $385M to $420M with a higher margin range.
• A multi-year agreement with a Tier 1 hyperscale customer, per the CEO (not named in the release).

What broke

• Margins. Non-GAAP gross margin fell to 28.7% from 29.8% in June and 31.0% a year ago.
• The US build. The 2027 capacity plan is delayed by power and construction issues.
• Operating line. Still an operating loss of $1.4M; the GAAP profit leans on other income.
• Dilution. About 96M shares in the Q4 guide.
• The tape. A $46.89 close on November 5 before the release, down 56% over a month and 65% over three months, up 49% over a year in the data QA tracks.

What to watch

• The call and the 10-Q: the terms and the customer behind the new multi-year agreement, and customer concentration.
• Fourth quarter revenue against the $385M to $420M guide, and gross margin against 29.5% to 31%.
• Capacity: over 500,000 units a month of 800G and 1.6T by the end of 2026, and the new timing of the US plant.
• Share count against the 96M in the guide.
• Levels. The auto Fibonacci retracements of the 52-week range sit at $64.55 and $100.69, both above the November 5 close.

The level map, the peer table and the standing thesis live on /stocks/aaoi, with the company primer in Applied Optoelectronics and the AI optical bottleneck. The full $AAOI dossier collects the filings and the numbers. To follow the optical names as a group, see the Networking / Optical bubble.

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Educational research on structural market dynamics. Not investment advice. QuantAbundance positions may change without notice.