MaxLinear’s AI Optical Business Surged 136% and the Stock Jumped 84% Overnight - Is MXL a Buy at $63?

Q1s numbers were solid - no argument there - but they weren't the main story. The revenue of $137.2 million did beat the analysts' expectations of $134.6 to $137.1 million, non-GAAP earnings per share of $0.22 beat the $0.18 estimate by a cool $0.04, and MaxLinear's non-GAAP operating margin expanded by a whopping 18% to 16% of revenue. Non-GAAP gross margin actually held steady at 59.5%. GAAP net loss of $(45.1) million - that's just what you'd expect when you're still working out the kinks from restructuring from legacy broadband into a business focused on AI infrastructure - kicks in with the usual suspects of stock-based comp and intangible amortisation.

The real story was the Q2 guidance. Revenue of $160 to $170 million, an eye-popping increase from Q1's $137.2 million and just totally blowing away what the street was expecting. 

CEO Kishore Seendripu made it crystal clear on the earnings call: "We're at this clear tipping point in our optical data centre business, and I mean we get a massive step change in revenue in Q2". 

MaxLinear also upped its full-year 2026 optical data centre revenue outlook to $150 to $170 million, bumping it up to a more optimistic range thanks to improved visibility on those hyperscale design wins and production ramps. Needham hopped on board with a Buy rating and a $60 price target - which now looks like a bargain - and Stifel raised its own Buy target to $49 - and that too has now been undercut by the stock price.

The star of the show is MaxLinear's Keystone PAM4 DSP platform - this is the high-speed 400G and 800G optical interconnects that sit inside the optical transceivers that connect GPUs across AI clusters in the hyperscale players. That market is booming straight in line with the rate at which AI data centres are being built out. And Infrastructure revenue has gone from being a tiny part of the business to being the biggest one in just a couple of years - meanwhile management is saying all broadline segments are set to grow sequentially in Q2 - meaning the explosion in the optical business isn't cannibalising the rest of the business.

On the technical front, the weekly chart shows a near vertical rally from sub-$20 to over $60 - & now price is right in the middle of the Fibonacci extension zone between $53 and $60. The RSI has just burst above 90 - that's as overbought as it gets - and the next big resistance zone is at $70 to $77 - that aligns with a big supply zone from back in 2021. 

For now the key support zone is $53 with a secondary zone of $47 to $42. As long as $53 holds, the overall structure of the chart looks pretty positive. But if you try chasing prices above $63, the risk-reward just isn't in your favour - the better trade is to wait for a pullback into that $53 to $47 zone.

MaxLinear (MXL) Price Chart - Source: Tradingview

Trade Setup

Pullback entry: $53-$47 support zone - just wait for the RSI to cool off a bit from being so overbought

Target 1: $70 - that's the next big resistance zone

Target 2: $77 - that's a major supply zone from 2021 to contend with

Stop loss: weekly close below $47 - that's when the whole bullish structure falls apart

MXL has a genuine bull case going on. The company has managed to pivot from being a legacy broadband chip company into an optical AI connectivity play with all the big hyperscalers starting to get on board. The 400G to 800G upgrade cycle is still in its early days & the $150-$170 million full year optical outlook that they just raised on Q1 results gives that trajectory a lot of credibility. Yes, the stock is trading at around 12 times trailing revenue on a segment that's growing at 136% a year, which is pricey - but not impossible for a company in this sort of position of an AI infrastructure ramp

But on the other hand the bear case is all about concentration & cash. A lot of that infrastructure growth is coming from a tiny handful of hyperscale customers - so any kind of design loss or deployment delay would really hit revenue hard. And whereas the cash on hand is a respectable $89.9 million, the credit facility stretches all the way to 2028 with a $130 million limit, but it's not even been drawn on yet. At $63 the market has already priced in most of that 2026 optical ramp. The $53 to $47 zone is really where the risk-reward starts to swing back in the buyers favour.

Why did MaxLinear jump by a whopping 84% on April 24th?

MaxLinear really shot up after Q1 came in and Infrastructure revenue had more than doubled year over year, up a massive 136% to a staggering $63 million - all thanks to AI optical connectivity. And to top it all off, they not only met expectations but actually managed to beat them with a $0.22 earnings per share number. And let's not forget the massive volume that confirmed to everyone that MaxLinear is now a high-growth AI powerhouse for real.

What's the outlook for Q2 2026?

MXL are basically saying they're expecting a big jump in revenue, anywhere from $160 million to $170 million, which is a pretty big deal. And if that wasn't enough, they've even raised their full-year optical outlook to $150m-$170m on the back of huge demand for their 800G Keystone tech at the big hyperscalers.

Is MXL a buy at $63?

We all know the stock is looking pretty overbought at the moment with an RSI of above 90. So the risk/reward just isn't that great right now. But despite that, the turnaround is real, so we'll be looking for the right entry point in that $47 to $53 support zone for a better setup overall.