Applied Optoelectronics Stock Tumbles 7% Following Q1 Revenue Shortfall Despite 51% Growth

Applied Optoelectronics shares dropped over 7% in Thursday's early after-hours trading after the company released its Q1 2026 financial report.

Both the first-quarter results and the second-quarter guidance for revenue and earnings per share fell below market expectations. The stock had already finished the regular trading session down 11.7%.

For the quarter ending March 31, the fiber-optic networking firm reported an adjusted loss per share of $0.07, compared to the consensus estimate of a $0.05 loss per share.

First-quarter revenue rose 51% year-over-year to $151.1 million, missing the estimated $154.81 million. The revenue shortfall was primarily due to performance in the data center segment, which generated $81.4 million against an estimate of $91.4 million.

The adjusted gross margin for the quarter was 29.2%, below the projected 30.4%.

For the upcoming quarter, the company forecasts revenue between $180 million and $198 million, with a midpoint of $189 million, lower than the $196 million consensus. It expects adjusted EPS in the range of ($0.03) to $0.03, compared to the $0.07 estimate, and an adjusted gross margin of 29% to 30%.

"We continue to see strong customer engagement for our 800G transceivers and 1.6 Tb products, especially as AI-driven data center investments accelerate," said CEO and founder Thompson Lin. "Notably, we completed our first volume shipment of 800G products to a major hyperscale customer in Q1. We anticipate a significant volume increase for our 800G products starting in Q2 and expect sequential revenue growth throughout the year, with substantially larger growth beginning in Q3 as additional production capacity becomes available."