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Applied Optoelectronics

AAOI
26
Communication Equipment · Technology
Also trades as: 0HGV.L GBP 0.68 (+1.73%)
Price
$67.51
-0.56 (-0.82%)
Market Cap
$5.73B
Exchange
NASDAQ
Winston Score
26
Winston is worried
Below-average fundamentals — multiple weak pillars.
Data as of Oct 24, 2026 · filings through Jun 30, 2026

§How the score breaks down

Quality
Weak
4/30
Growth
Mixed
8/20
Cash Flow
Weak
0/10
Stability
Good
5/10
Valuation
Data not available
0/10
Ownership
Good
8/15
Dividends
Not counted
n/a

25 of 95 counted points = Winston Score 26. Pillars marked n/a do not apply to this company and are left out of the total.

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Share count rising — dilution

+123.6% over 4y

The company has issued more shares over this period, which dilutes each existing shareholder’s stake.

Diluted shares outstanding: 26.9M (2021) → 60.2M (2025)

§Winston Score History

The full picture

Applied Optoelectronics, Inc. (AAOI) makes fiber-optic networking components — the hardware that helps data travel at high speeds through cables made of light. Its main products include lasers, transceivers, and other optical devices used inside data centers, cable TV networks, and internet infrastructure. The company sells primarily to large cloud computing companies and cable operators in the United States and Asia.

AAOI earns revenue by selling physical hardware, so its income depends on customer orders that can swing sharply from quarter to quarter. Most of its manufacturing is done at its own facilities in Texas and Taiwan, giving it some control over production costs. The company has struggled with profitability, as shown by its negative operating and return-on-invested-capital figures. The key growth driver is rising demand for high-speed optical components tied to AI data center buildouts, but customer concentration risk — where a few large buyers make up most of its sales — remains a significant vulnerability.

Growth Profile

When traditional metrics don't capture the full picture, these are the signals growth stock investors use instead.

Revenue Growth

+86.4% YoY

YoY Growth Rate

Revenue accelerating

Reported EPS Growth

-75.0% YoY

Quarterly reporting periods ended:

30 Jun 2025: $-0.16

30 Jun 2026: $-0.28

Reported/statutory EPS, not adjusted or underlying earnings. One-off items can affect this figure. Provider rounding can affect the growth rate.

YoY Growth Rate

Reported EPS decreased year over year

R&D Spend

$86M/ year

↑ Rising (+56% vs prior year)

18.8% of revenue

In line with sector average (15%)

Investing heavily in future products and technology

Insider Activity

5.4%ownership

→ Flat

Insider ownership roughly steady over the past year

Cash Runway

~6 months

$500M cash & investments

Quarterly Free Cash Flow

↓ Burn rate worsening

Short runway — potential dilution ahead through share issuance

Revenue accelerating

Applied Optoelectronics grew revenue 86% year-over-year and the growth rate is speeding up. That's the kind of momentum growth investors look for — the question is whether margins can follow.

The Winston Score above measures business quality today. Growth stocks often score lower because they invest in the future rather than maximising current profits. These metrics show what matters most for evaluating that future.

Score breakdown

Every number that matters to educated investors.

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Quality

Profit per sale
Gross Margin
27.7%
Modest — 27.7% gross margin
Profit after running costs
Operating Margin
-12.9%
Losing money on operations — -12.9%
Return on the money invested
ROCE
-3.5%
Weak — -3.5% return on capital

Negative ROIC means the business is losing money on every dollar invested in it.

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Growth

Sales growth
Sales YoY
+61.8%
Fast-growing sales (+61.8% YoY)
Profit growth
EPS YoY
N/A
—
Data not available
How steady the profit is
EPS Consistency
4/8 quarters
Earnings inconsistent quarter-to-quarter

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Cash Flow

Profit that turns into cash
Cash Conversion
N/A
—
Data not available
Spare cash per sale
FCF Margin
-104.3%
Burning cash (-104.3%)

Free cash flow is negative. They are burning cash, not generating it.

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Stability

What it owes vs what it owns
Debt / Equity
0.16
Conservative — low debt load (0.16)
Covers its interest
Interest Cover
N/A
Data not available

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Valuation

Price vs profit
P/E Ratio (TTM)
N/M
—
Negative earnings — P/E not meaningful
Cheaper or dearer next year
P/E vs Forward
N/A
not available
Data not available

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Dividends

Not applicable for this business.
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