AAOI — expert X mentions

$AAOI internal laser capacity IS the thesis They are much more than a transceiver supplier. Their InP ramp is the whole reason I am invested. In fact, for their existing 400G and 800G transceivers, 100% of the lasers are fabricated entirely in-house. For upcoming 1.6T they actually WANTED to source a portion of the lasers externally to ease manufacturing pressure, but because of the persistent InP laser and EML shortage, they are committing to a 100% in-house laser sourcing plan. So again, much more than a transceiver company

Ah, $AAOI . What a journey it's been. Market cap: ~$8.2B Next-quarter guide: ~$189M (+25.1% QoQ, +83.5% YoY) My next-12M revenue estimate: $1.45–1.75B, 180–250% growth My exit margins: 35–38% adjusted gross, 20–25% adjusted operating Valuation: ~4.7–5.7x next-12M sales AAOI is probably the highest-upside setup in this group. It is also the one with the widest range of outcomes. Their exposure includes: > CATV infrastructure > 400G transceivers > 800G transceivers > 1.6T transceivers > Internal InP lasers > External laser modules for CPO The key thing to understand is how early the AI-optics ramp still is. 800G contributed only $4.6M in Q1. So the biggest near-term revenue engine is starting from almost nothing. AAOI expects 800G to ramp sharply through the rest of 2026, while 1.6T begins after qualification and becomes a much larger contributor in 2027. Combined 800G and 1.6T capacity is expected to increase from roughly 100,000 units per month exiting Q1 to more than 650,000 by year-end. That is a massive capacity increase in a very short period. Demand does appear to be there. Management says forecast demand for 800G and 1.6T exceeds production capacity through mid-2027, and AAOI has already received volume orders from major hyperscalers, including an initial 1.6T order. CATV also gives AAOI an important second engine. That business should generate more than $325M annually and helps fund the transition into AI optics while the newer data-center programs scale. The potential margin improvement is meaningful. Gross margin remains near 30% during the early ramp because of startup costs, lower utilization, and initial yields. If AAOI fills the new factories, improves yields, and increases internal laser content, I think adjusted gross margin can move toward 35–38%, with operating margin reaching 20–25%. But this is an extremely back-half-loaded model. To reach my next-12-month range, AAOI needs to average roughly $420–520M per quarter during the three quarters after the current $189M guide. That is the hardest revenue bridge in the group. The upside is obvious. If the ramp works, AAOI could become one of the fastest-growing optical suppliers while trading at one of the lowest multiples. The risks are equally obvious with qualifications, factory timing, yields, customer concentration, capex, ATM issuance, dilution, and any delay in 800G or 1.6T production. Every quarter from here is a capacity-to-revenue audit. The Q3 guide is everything. NFA

@NullContex1s If $AAOI are projecting $1.4B a quarter q3 2027 ($471m/month), which is $5.6B revenue annualized, (targeting 40%+ gaap gross margins). And they’re a $8B MC… Or if personal $SIVE CW Win capacity projections are around ~$400m midpoint array revenue off 60% gross margins. And that’s a $1B MC. Just applying a low 20 fwd p/e might rerate optical names considerably. Even with other names like $LITE, they’re completely sold out for the next 2 years, and having that sort of demand visibility… Is not a bubble. Europeans tend to use TTM to value companies while optical names are 2027-2028 growth stories.

@waynexonline $AAOI themselves gave a $471m / month estimate starting H2 2027. If 800g gets revised up sharply across the board, that number might get hiked.

Thanks, love reading the comments! Goldman Sachs raised Innolight PT to 2581 RMB. Roughly 163.6% upside from current valuations. But the largest thing is its 2026–2028 earnings est revision raised by a whopping 65%/108%/119%, based on: - Much higher silicon photonics module volumes - scale out, scale up, scale across volumes - 1.6T/3.2T lifting blended ASP + margins - increase in AI capex This is typically very material read through on the optical sector since: I tend to think of Innolight as a $TSM (semi capex) type read on how the photonics landscape is doing. Eg. Higher silicon photonics penetration means more TAM for cw lasers like $SIVE (cw) / SOI wafer demand for $SOI. ASP hikes for future gen is positive for the other optical markers too. Think my other takeaway outside the report was Innolight stating 800g demand was growing more significantly than expected from their transcript on the 12th. Which in turn signals more demand for names like $AAOI to $LITE next earnings. TLDR: GS gives high earnings projections during a time of massive corrections. Fundamentally, broader photonics ecosystem should be happy when it’s ER time.

Agreed! It’s nice to remember your thesis during a market crash. From my own personal thesis, if $AAOI hits $1.4B quarterly revenue start of Q3 2027. Which is annualized $5.6B off a $8B MC. Is it “over” for the company if that revenue ramp hasn’t even shown up in the quarterly earnings… when it’s 2026? Same applies to my CPO sector exposure like $SIVE, an architecture shift led by $NVDA. If scale out volume ramps from H2 2026 into 2027, and scale up heavily volume ramps into 2028. Is it “over” that $0 -> $91B TAM expansion (per GS) hasn’t even hit yet? With robotics like Agility, is it over in 2026 if the listing hasn’t even happened yet and humanoids haven’t ramped? I personally think current market conditions are a reflection of liquidity and leverage, not individual fundamentals. It’s brutal for everyone to see KOSPI, TW, Nikkei, and AI, space, robotics sector stocks crash recently. Especially when there’s a lot of irrational behavior stemming from those leverage. In the end, we can’t tell you what stocks to buy, what timeframe you should sell, how to size your positions, or what you should do. Only share personal thoughts or research and track if they get validated over time. So it’s extremely important to build your own thesis, since everyone has unique risk tolerance or investing timeframes. And that usually leads to having higher conviction during crashes.

$AAOI now trading below 3x 2027 revenues with revenues expected to grow triple digits in 2026, 2027 and maybe 2028. Some of these valuations are starting to make absolutely no sense... keep in mind that hyperscaler capex is expected to exceed $800 BILLION this year and $1 TRILLION next year.

I personally think valuations are extremely stupid now on $AAOI and $SIVE. With AAOI you're doing $5.62B annualized revenue (probably higher), by midpoint next year. And it's a $8B MC. With Sivers, I would est. it's close to ~5 forward 2028 P/E off 10% win allocation, 65% yield, and $75 ASP.

@meikozz_2026 I don't see any fundamentally wrong. There's probably going to be large corrections from time to time flush out margin/leverage before things move higher. And this month seems like that time of year? $POET confirmed your big optical giants like $LITE, $COHR are completely sold out for the next 2 years, and likely into 2029 for photonics. Innolight confirmed 800g transceiver upward revisions 3 days ago, so that should be positive for $AAOI and the others. Samsung became the most profitable company in the world, and continues to project DRAM hikes for future quarters. $MU signed 16+ LTAs showing memory demand is structural... $META + hyperscaler capex plans are on the higher end of projections. I wouldn't conflate short term price movements with longer term trends. And as seen with $AEHR, recoveries tend to be extremely fast (eg. 1M of corrections wiped out overnight).

BofA: Optical Devices > 800G & 1.6T Outlook: 800G demand is expected to reach 50–60 million units in 2026, while 1.6T demand is projected at 30 million units. The industry is anticipated to satisfy 70–80% of 800G demand and 50–60% of 1.6T demand in 2026. > 2027 Projections: 800G demand is predicted to flatten, whereas 1.6T demand is expected to grow by at least 50%. > Silicon Photonics (SiPh) Penetration: SiPh penetration is forecasted to hit 50% for 800G and 60% for 1.6T by 2026. > Dominant Form Factors: Pluggable optical transceivers are expected to remain the mainstream technology through 2030, holding the vast majority of the market share. > Next-Gen Tech Rollouts: Near-packaged Optics (NPO)/Extra-dense Pluggable Optics (XPO) volume shipments are anticipated to start in 2027. Meanwhile, 3.2T pluggable transceivers (currently in R&D) are expected to see volume take-off in 2028. AI Architecture and Component Constraints > Copper vs. Optics (Scale-Up vs. Scale-Out): Mainstream scale-up architectures (specifically Nvidia’s GPU-to-GPU connections) are expected to rely heavily on short-reach copper through 2028 due to lower power consumption, reliability, and cost-effectiveness. Optics will continue to dominate in scale-out architectures. > Active Electrical Cables (AEC): AECs are becoming critical, especially at the 1.6T node for intermediate reaches of 5 to 7 meters where Direct Attach Copper (DAC) loses signal integrity. > Component Shortages: The industry is experiencing tight supply across EML, DSP, and faraday rotators, with laser shortages expected to last into 2027. However, BofA experts note that tier-1 suppliers with scale and prepayment resources could see supply situation easing in the latter half of 2026. Hyperscaler Profiles & Supplier Dynamics > AWS: Known for demanding low-cost solutions, AWS is a massive deployer of 400G and is ramping up 800G. They have distinct requirements, such as utilizing I3C for management interfaces and partnering with STMicroelectronics for Silicon Photonics. > Google: Leads in newer optical switching architectures (Optical Circuit Switches - OCS). They began shipping 1.6T modules in Q4 2025 and are expected to triple or quadruple their optical volume in 2026–2027. > Meta: Actively ramping up 800G in 2026, which is expected to contribute over 10 million units in volume. Meta is also uniquely open to testing Co-Packaged Optics (CPO) and Linear Pluggable Optics (LPO) due to power sensitivities. > Microsoft: Focuses on a highly distributed data center model with links spanning 70 to 80 kilometers. They purchase heavily from Nvidia and are pioneering the "slow and wide" macro LED approach for GPU connections. > China Cloud: Hyperscalers like Alibaba and ByteDance are estimated to be 2 to 3 years behind US counterparts, remaining heavily centered on 400G due to regional regulations and US DSP limitations. > Supplier Landscape: Despite a growing number of smaller entrants, tier-1 leaders like Innolight, Coherent, and Eoptolink are expected to continue dominating, maintaining over 50% of the market share through strict CSP bidding caps. $MSFT $GOOGL $AMZN $NVDA $TSEM $BABA $STM $CRDO $SMTC $APH $AAOI

Really positive to see $AAOI announcing their Texas capacity expansion earlier today. We've known about their expansion plans for a while now. But it overall supports their proposed 800G/1.6T expansion timelines: - Q1 2026: 100k monthly capacity - End 2026: 650k+ - End 2027: 930k+ With $471M of monthly transceiver revenue by mid-2027 forecasted if all goes to plan. Personally have high confidence that their expansion is underwritted by hyperscaler volumes e.g. $AMZN achoring. Also, people rightly have PTSD with AAOI management, but seems like they're progressing along the timeline we all expected a few quarters ago.

With the $AAOI expansion announced today, here’s what it actually means for the company. Their bottleneck was never demand. It was capacity. $AAOI has order visibility stretching well over a year out, and $1B+ guided for 2026. The demand is already sitting there. They just physically can’t build fast enough to ship it all. That’s what 400,000 sq ft in Pearland, Texas fixes. Every square foot converts demand they can already see into revenue they can actually recognize. This isn’t speculative capacity hoping customers show up. The customers are already in line. It also changes their position in the supply chain. This is US made 800G and 1.6T production at the exact node the industry needs most, right as hyperscalers push to onshore their optics supply. When big companies want domestic transceiver capacity at scale, the list of options is short, and $AAOI just made itself a bigger part of it. And the timing lines up with the cycle. 1.6T mass adoption hits late 2026 into 2027. This capacity comes online right into that wave. They’re not building for today’s orders, they’re building for the ramp they can see coming. Companies don’t expand on hope. They do it when the orders are visible.

Two different capacity expansion announcements today across $TSEM and $AAOI. Tower Semi, supported by the Japanese government, announced expansion of its 300mm Silicon Photonics (SiPho), Silicon Germanium (SiGe), and advanced packaging capabilities. Targeting $1.2B net profit, and $3.6B revenue in 2028 (with a ~$28B MC, that's ~23.3 2028 forward p/e). AAOI announced the commencement of its buildout, roughly 400,000 square feet of manufacturing to make 800g/1.6T production go brrr. The overall expansion is also supported by the local city government in Texas. (they also $20.85M worth of subsidies from the State earlier). This one isn't exactly as materially new as Tower, since AAOI originally announced these plans before. Just commencement of it. Regardless, glad to see both of these companies in their Anime training arc phase as they power up.

$AAOI just broke ground on nearly 400,000 sq ft of new manufacturing in Pearland, Texas. All of it dedicated to 800G and 1.6T optical transceivers. https://t.co/yRbJMdeuxU

Finally some good news for $AAOI The just broke ground on a nearly 400,000 sq ft manufacturing expansion in Pearland, Texas to scale 800G and 1.6T transceiver production for AI and cloud demand. Companies don’t build 400k sq ft of capacity unless the orders are already visible. They’re guiding $1B+ revenue for 2026, and demand is just starting to ramp. The buildout speaks for itself.