Applied Optoelectronics, Inc. (NASDAQ:AAOI) shares rose 15.53% on Friday, closing at $150.28 per share, as investors adjusted their portfolios in anticipation of significant business updates.
According to the company, Chief Financial and Strategy Officer Stefan Murray will be presenting at the Rosenblatt 6th Annual Technology Summit on Tuesday, August 18.
Investors are likely to focus on the company's updated outlook and targets, as well as its performance during the first few weeks of the third quarter.
Optimistic Outlook
Earlier this month, Applied Optoelectronics (NASDAQ:AAOI) issued its third-quarter revenue guidance, projecting revenue between $255 million and $290 million. This represents an increase of 115% to 144% compared to the $118.6 million reported in the same period last year, driven primarily by confidence in strong demand for its 800G and 1.6T transceivers.
The company also anticipates turning a net profit of $10.1 million to $24 million, compared to a net loss of $5.4 million in the prior-year period.
Multi-Million Dollar Orders in Q2
The stock's rise may also be fueled by new deals secured in March and the second quarter.
On March 9 alone, Applied Optoelectronics (NASDAQ:AAOI) received its first volume order for 1.6T data center transceivers from a longstanding customer, aiming to increase network bandwidth for its AI workloads.
A few weeks later, the company secured an order from a hyperscale data center customer for its 800G single-mode data center transceivers to support network capacity for its AI-driven workloads.
On April 2, Applied Optoelectronics (NASDAQ:AAOI) stated that the same customer placed an additional $71 million order for the same data center transceivers, bringing the latter's total order value to $124 million.
Expansion Underway
To meet robust market demand, the company is expanding its facilities in Pearland and Sugar Land, Texas, to increase its production capacity.
The Pearland site alone will add two adjacent buildings, equivalent to 388,000 square feet of production capacity, with construction formally commencing earlier this year.
The company also received a $20.8 million innovation fund grant from the state of Texas to support its production expansion in Sugar Land.
The facility in Sugar Land is currently under construction and, upon completion, will expand its footprint by 210,000 square feet. This site is set to become one of the company's largest U.S. facilities dedicated to AI data center transceivers and is expected to create over 500 new jobs.
Hedge Funds Buying
Institutional investors have shown strong confidence in the company, evidenced by an increased number of participating hedge funds and a 215% surge in their total investments.
Data from Insider Monkey shows that 55 hedge funds held stakes in Applied Optoelectronics (NASDAQ:AAOI) in the first quarter of this year—coinciding with a surge in orders for its optics products. This number is higher than the 36 funds in the previous quarter.
Notably, their collective holdings more than tripled from $277 million in Q4 2024 to $871.3 million, indicating a significant rise in bullish sentiment among large investors towards the stock.
