What is AAOI's intrinsic value?

TickerWorth's blended fair value for Applied Optoelectronics, Inc. (AAOI) is $64.45 per share, versus a market price of $77.41 (priced within our range of $26.88 – $80.55).

Is AAOI overvalued or undervalued?

Priced within our range of $26.88 – $80.55 at $77.41. We don't call AAOI overvalued or undervalued from a range. This is an educational estimate, not advice.

What discount rate is used for AAOI?

A WACC of 15.2% and a terminal growth rate of 2.5%.

Is Applied Optoelectronics stock undervalued?

TickerWorth's fair value for Applied Optoelectronics, Inc. (AAOI) is $64.45 against a market price of $77.41. Our read: Priced within our range of $26.88 – $80.55. This is a model estimate, not investment advice.

Applied Optoelectronics (AAOI) DCF valuation and fair value

Our fair value for Applied Optoelectronics, Inc. (AAOI) is $64.45, built on a 15.2% discount rate (WACC) and 2.5% terminal growth. It blends our discounted-cash-flow model with other valuation lenses. Every assumption is listed on this page with its source.

What growth is priced into Applied Optoelectronics stock?

no growth rate up to 300%/yr justifies the price under these economics This is a reverse DCF: it holds our cash-flow model's other inputs and solves for the revenue growth that makes the model equal today's price of $77.41. A model estimate, not investment advice.

Applied Optoelectronics (AAOI) insider trading

The most recent insider filing (SEC Form 4) for Applied Optoelectronics, Inc. (AAOI): Murry Stefan J., Chief Financial Officer, open-market sale on 2026-10-12. The latest filings are listed on this page. A disclosure, not a signal to trade.

AAOI · Intrinsic value

Is Applied Optoelectronics, Inc. (AAOI) overvalued or undervalued?

Name: Applied Optoelectronics, Inc. (AAOI) DCF intrinsic value
Creator: TickerWorth

TickerWorth's fair value for Applied Optoelectronics, Inc. (AAOI) is $64.45 a share, against the delayed market price of $77.41 (priced within our range of $26.88 – $80.55). no growth rate up to 300%/yr justifies the price under these economics We do not call it over- or undervalued from inside our range.

Model by Miraaj Patel · generated from a hand-researched model · Updated Oct 19, 2026 · How these pages are made

Open full AAOI analysis

Is AAOI fairly valued?

Fair value: $64.45
Market price: $77.41
Downside to fair value: 16.7%
Verdict: Priced within our range of $26.88 – $80.55

Price as of 19 Oct 2026, 13:55 UTC · Prices are delayed.

Fair value against the delayed market price: Priced within our range of $26.88 – $80.55.

Reverse DCF, on our cash-flow model rather than the fair value above: no growth rate up to 300%/yr justifies the price under these economics

What is AAOI's TickerWorth Score?

D45/100

Priced richly vs peers — the business scores well

Compared with Technology companies in US

Its strongest point: growing quickly. Its weakest: profitability is weak.

Value · 34 of 100
Cheaper than 34% of Technology companies in US
Price vs worth · 37 of 100
Quality · 14 of 100
More profitable than 14% of Technology companies in US
Financial health · 73 of 100
Financially stronger than 73% of Technology companies in US
Growth · 89 of 100
Growing faster than 89% of Technology companies in US
Momentum · 38 of 100
Outperformed 38% of Technology companies in US over the past year

Confidence: Medium confidence · Scored 19 Oct 2026, 13:55 UTC

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Where the numbers come from

Hand-researched model

What the modeller flagged

TERMINAL VALUE EXCEEDS 100% OF ENTERPRISE VALUE. The five explicit years are net cash OUT (Year 1 ~-$580M, Year 2 ~-$40M of FCF), so the perpetuity is worth more than the whole business: everything rests on the 2030 steady state. Treat the precision of the per-share figure accordingly; I have not tuned any input to soften this.
YEAR-1 FCF vs REPORTED: the base-year reported FCF was -$353.6M and the model's Year 1 is ~-$580M even though Year 1 carries only H2 capex. Both are deeply negative; the 20% gap test is not meaningful on two negative numbers, but the direction is stated: the model's Year 1 is the more negative because it includes a full year of working-capital build on +$590M of revenue.
THE CYCLE IS NOT MODELLED AS A DOWN-YEAR. AAOI's last boom (2016-17, also driven by a handful of hyperscalers) ended with revenue halving in two years and eight straight years of operating losses (2018-2025). This forecast has no negative year; if the AI optics build pauses, or one of the two hyperscalers dual-sources away, the 2027-30 path is too high. The high discount rate is carrying that risk rather than an explicit trough.
2027 CAPEX UNDERSTATED. The constant 10% capex rate gives ~$230M in 2027; the announced build to >930,000 units/month by end-2027 points to several hundred million more. Sized at roughly -$3.40/share; not modelled to keep the perpetuity at a steady-state rate.
DILUTION NOT CAPTURED: the new $600M ATM (opened 2026-08-21) and 6.62M unvested Amazon warrant shares. At today's price ATM sales are accretive to this model's per-share value; the warrant is dilutive if Amazon's purchases reach $4B.
BETA NORMALIZED DOWN from a published 3.78 to 2.0 (GENEROUS). Every window I measured put AAOI between 2.4 and 6.4. Using AAOI's own lowest 5-year figure (2.4) lowers the value by ~$2.70.
GAAP margins with stock pay as a cost. AAOI's non-GAAP figures add back SBC (~$9.3M in H1 2026), discontinued-product costs, non-recurring legal costs and a sizeable non-GAAP tax benefit ($14.3M in Q2) — Q2's non-GAAP 'profit' of $5.5M was a GAAP loss of $22.8M.
GEOGRAPHIC AND TRADE RISK: a large share of production and capex sits in Ningbo, China (H1 capex $103.3M in China, $62.8M in Taiwan, $169.0M in the US) while the customers are US hyperscalers. Tariff and export-control changes are named risks in the 10-Q; not modelled.

AAOI DCF valuation, input by input

TickerWorth's fair value for Applied Optoelectronics, Inc. (AAOI) is $64.45 a share, against the delayed market price of $77.41 (priced within our range of $26.88 – $80.55). We do not call it over- or undervalued from inside our range. It is a model estimate, and every input behind it is sourced below.

Read the full reasoning

For this company that blend leans on peer multiples: our discounted-cash-flow model understates a business growing this fast, so read the gap as how the market prices it against comparable companies, not as a finding on cash flow. This is an educational model, not a price target or a recommendation.

The valuation discounts Applied Optoelectronics, Inc.'s projected free cash flows at a weighted-average cost of capital (WACC) of 15.2%, with a long-run terminal growth rate of 2.5%. About 111% of the enterprise value comes from the terminal value — the portion beyond the explicit forecast window — which is unusually high — most of the answer comes from a single assumption about the far future, so treat this figure as low-confidence and lean on the multiples alongside it.

Sensitivity matters more than any single number. Across a reasonable band of discount-rate assumptions, AAOI's modeled DCF value ranges from about $12.47 to $19.69 per share. If that range still sits below today's price, the market is optimistic relative to the model across the whole band; if it brackets the price, the stock is roughly fairly valued on our assumptions. Use the interactive slider to see exactly where your own cost-of-capital view lands.

How to read this page: the DCF fair value is what Applied Optoelectronics, Inc. would be worth if its cash flows grow as modeled and are discounted at the stated WACC. The assumptions table shows every input and its source; the reverse-DCF shows what the market believes; the sensitivity band shows how fragile the answer is. None of this is investment advice — it is a transparent, auditable framework for forming your own view of AAOI's intrinsic value. Figures update as new filings and prices come in.

Every input behind AAOI's DCF

Input	Value	Source
Base-year revenueApplied Optoelectronics FY2025 10-K (accession 0001437749-26-005875, filed 2026-02-26): us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax, FY2025 = $455,715K, +82.7% on FY2024's $249,365K. Mix (10-K): CATV 53.8%, data center 42.9%, telecom 3.0%. UNCHANGED as the base — the 2026 ramp belongs in the forecast. CROSS-CHECK: H1 2026 revenue $343,066K (+69.2% on H1 2025's $202,811K); Q2 2026 $191,922K, a fifth straight record, with data center $107,662K (+140% YoY) now 56% of the quarter. HISTORY THAT MATTERS FOR THE RISK SECTION, same XBRL tag: revenue went $382.3M (2017) -> $267.5M (2018) -> $190.9M (2019) when data-center demand from a few customers rolled over, and stayed $210-250M until 2024.	$455,715,000	Applied Optoelectronics FY2025 10-K (accession 0001437749-26-005875, filed 2026-02-26): us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax, FY2025 = $455,715K, +82.7% on FY2024's $249,365K. Mix (10-K): CATV 53.8%, data center 42.9%, telecom 3.0%. UNCHANGED as the base — the 2026 ramp belongs in the forecast. CROSS-CHECK: H1 2026 revenue $343,066K (+69.2% on H1 2025's $202,811K); Q2 2026 $191,922K, a fifth straight record, with data center $107,662K (+140% YoY) now 56% of the quarter. HISTORY THAT MATTERS FOR THE RISK SECTION, same XBRL tag: revenue went $382.3M (2017) -> $267.5M (2018) -> $190.9M (2019) when data-center demand from a few customers rolled over, and stayed $210-250M until 2024.
Base EBIT marginApplied Optoelectronics FY2025 10-K (accession 0001437749-26-005875, filed 2026-02-26): us-gaap:OperatingIncomeLoss FY2025 = -$54,602K / $455,715K = -11.98%. GAAP, with stock pay ($11.7M) inside. AAOI has posted a GAAP operating loss every year since 2018 (2019-2025: -$48.7M, -$48.8M, -$56.8M, -$59.0M, -$41.3M, -$70.9M, -$54.6M); its last operating profit was 2017's $87.0M (22.7% margin) at the top of the previous data-center cycle. CROSS-CHECK: H1 2026 GAAP operating loss -$37,718K = -11.0% of revenue (Q2 alone -12.9%), so the losses have NOT yet turned despite revenue up 69% — R&D rose 57.5% and G&A 62.7% in H1 as the company staffs up for the ramp. Because the base is a loss, the cyclical flag's peak test uses Year 1's margin.	-12.0%	Applied Optoelectronics FY2025 10-K (accession 0001437749-26-005875, filed 2026-02-26): us-gaap:OperatingIncomeLoss FY2025 = -$54,602K / $455,715K = -11.98%. GAAP, with stock pay ($11.7M) inside. AAOI has posted a GAAP operating loss every year since 2018 (2019-2025: -$48.7M, -$48.8M, -$56.8M, -$59.0M, -$41.3M, -$70.9M, -$54.6M); its last operating profit was 2017's $87.0M (22.7% margin) at the top of the previous data-center cycle. CROSS-CHECK: H1 2026 GAAP operating loss -$37,718K = -11.0% of revenue (Q2 alone -12.9%), so the losses have NOT yet turned despite revenue up 69% — R&D rose 57.5% and G&A 62.7% in H1 as the company staffs up for the ramp. Because the base is a loss, the cyclical flag's peak test uses Year 1's margin.
Forecast revenue growthESTIMATEAssumption — TickerWorth's 5-year explicit forecast	130% → 120% → 20% → 8% → 4%	ESTIMATEAssumption — TickerWorth's 5-year explicit forecast
Risk-free rateUS 10Y Treasury constant maturity (FRED DGS10): 5.24% on 2026-10-01, the latest published observation.	5.2%	US 10Y Treasury constant maturity (FRED DGS10): 5.24% on 2026-10-01, the latest published observation.
BetaESTIMATEAssumption — normalized estimate (published Yahoo 5Y-monthly beta 3.783 via yfinance, read 2026-10-02): Published 5Y-monthly beta 3.783. NORMALIZED DOWN to 2.0 — GENEROUS (lowers the discount rate, raises the value). My own regressions of yfinance monthly returns on the S&P 500 all say AAOI is a very high-beta stock: 3.98 (60 months), 6.43 (36 months), 2.81 (120 months), 2.77 (60 months to 2025-06), 2.39 (60 months to 2024-12); 2-year weekly 3.57. The published figure is inflated by the 2025-26 run from ~$18.50 to $233.67 and back to ~$100, a share-price path dominated by company-specific news (orders, ATMs) rather than the market. Optical peers on the same 60-month method: Coherent 2.19, Lumentum 1.62, Fabrinet 1.31, Ciena 1.32. 2.0 sits just under Coherent and above the 1.60 this tracker uses for its other AI-cycle hardware names (MU, SNDK, AMD), which is the right ordering for a loss-making $10B company whose top three customers take 92% of revenue. Even so it gives a 15.2% cost of equity, applied forever — the single largest input. SIZING: beta 2.4 (AAOI's lowest measured 5-year window) gives ~$12.65; 1.6 gives ~$19.15; the published 3.78 gives ~$7.40. No beta in the plausible range closes the gap to the price.	2.00	ESTIMATEAssumption — normalized estimate (published Yahoo 5Y-monthly beta 3.783 via yfinance, read 2026-10-02): Published 5Y-monthly beta 3.783. NORMALIZED DOWN to 2.0 — GENEROUS (lowers the discount rate, raises the value). My own regressions of yfinance monthly returns on the S&P 500 all say AAOI is a very high-beta stock: 3.98 (60 months), 6.43 (36 months), 2.81 (120 months), 2.77 (60 months to 2025-06), 2.39 (60 months to 2024-12); 2-year weekly 3.57. The published figure is inflated by the 2025-26 run from ~$18.50 to $233.67 and back to ~$100, a share-price path dominated by company-specific news (orders, ATMs) rather than the market. Optical peers on the same 60-month method: Coherent 2.19, Lumentum 1.62, Fabrinet 1.31, Ciena 1.32. 2.0 sits just under Coherent and above the 1.60 this tracker uses for its other AI-cycle hardware names (MU, SNDK, AMD), which is the right ordering for a loss-making $10B company whose top three customers take 92% of revenue. Even so it gives a 15.2% cost of equity, applied forever — the single largest input. SIZING: beta 2.4 (AAOI's lowest measured 5-year window) gives ~$12.65; 1.6 gives ~$19.15; the published 3.78 gives ~$7.40. No beta in the plausible range closes the gap to the price.
Terminal growthESTIMATEAssumption — house default: House default 2.5%, kept for comparability. Must stay well below the 15.2% WACC; it does. For a company still growing 4% in 2030 in a market growing faster, 2.5% is a hard stop — but optical components are also a sector where products commoditise and share shifts violently, so I see no case for a higher perpetuity here.	2.5%	ESTIMATEAssumption — house default: House default 2.5%, kept for comparability. Must stay well below the 15.2% WACC; it does. For a company still growing 4% in 2030 in a market growing faster, 2.5% is a hard stop — but optical components are also a sector where products commoditise and share shifts violently, so I see no case for a higher perpetuity here.
Diluted sharesESTIMATEAssumption — Applied Optoelectronics Q2 2026 earnings release, 8-K Ex-99.1 (accession 0001683168-26-006055, filed 2026-08-06): POST-ISSUANCE COUNT, and not the 10-Q's GAAP 'diluted' figure. The Q2 10-Q's weighted-average diluted count is 81.568M, but it equals the basic count because AAOI made a loss (every option, RSU and convert is anti-dilutive) and it is a quarter AVERAGE that misses shares sold late in the quarter. Used instead: management's own Q3 2026 share count, 'approximately 92.8 million shares' (Q3 outlook, 8-K Ex-99.1). CROSS-CHECK, built from the 10-Q: 84,569,237 shares outstanding at 2026-08-03 (cover) + 2,884K shares underlying the 2.75% 2030 convertible notes (Note 6; conversion price $43.31, deep in the money) + 1,324K vested Amazon warrant shares (strike $23.70) + 2,503K RSUs = 91.3M; the ~1.5M difference is plausibly further ATM sales/grants. CONVERTS TREATED AS SHARES, NOT DEBT — the $124.9M principal is excluded from net debt, not counted twice. NOT INCLUDED: (a) any sales since 2026-08-21 under the new $600M ATM (unknown until the Q3 10-Q; at today's price a sale RAISES this model's per-share value, because new cash comes in at more than the model's value per share); (b) 6.62M UNVESTED Amazon warrant shares that vest only as Amazon buys up to $4B of product (10-Q Note 3) — on this model's revenue path that is plausible within the decade, which would dilute by ~7% at a $23.70 strike.	93M	ESTIMATEAssumption — Applied Optoelectronics Q2 2026 earnings release, 8-K Ex-99.1 (accession 0001683168-26-006055, filed 2026-08-06): POST-ISSUANCE COUNT, and not the 10-Q's GAAP 'diluted' figure. The Q2 10-Q's weighted-average diluted count is 81.568M, but it equals the basic count because AAOI made a loss (every option, RSU and convert is anti-dilutive) and it is a quarter AVERAGE that misses shares sold late in the quarter. Used instead: management's own Q3 2026 share count, 'approximately 92.8 million shares' (Q3 outlook, 8-K Ex-99.1). CROSS-CHECK, built from the 10-Q: 84,569,237 shares outstanding at 2026-08-03 (cover) + 2,884K shares underlying the 2.75% 2030 convertible notes (Note 6; conversion price $43.31, deep in the money) + 1,324K vested Amazon warrant shares (strike $23.70) + 2,503K RSUs = 91.3M; the ~1.5M difference is plausibly further ATM sales/grants. CONVERTS TREATED AS SHARES, NOT DEBT — the $124.9M principal is excluded from net debt, not counted twice. NOT INCLUDED: (a) any sales since 2026-08-21 under the new $600M ATM (unknown until the Q3 10-Q; at today's price a sale RAISES this model's per-share value, because new cash comes in at more than the model's value per share); (b) 6.62M UNVESTED Amazon warrant shares that vest only as Amazon buys up to $4B of product (10-Q Note 3) — on this model's revenue path that is plausible within the decade, which would dilute by ~7% at a $23.70 strike.
Market priceDelayed quote · as of 2026-10-19 13:55 UTC	$77.41	Delayed quote · as of 2026-10-19 13:55 UTC

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What does Applied Optoelectronics, Inc. do?

What does it do?

Applied Optoelectronics designs, manufactures, and sells fiber-optic networking products including optical modules, lasers, transmitters, transceivers, and amplifiers. The company serves internet data center operators, cable television providers, telecom equipment manufacturers, and internet service providers across the United States, Taiwan, and China.

How does it make money?

The company generates revenue by selling fiber-optic networking equipment and components to internet infrastructure and telecommunications customers through direct and indirect sales channels. In the most recent period, it reported total revenue of approximately $596 million with a gross margin of 29%.

Is it financially healthy?

Applied Optoelectronics shows mixed financial health: it has a strong current ratio of 2.78 and moderate debt-to-equity of 0.18, indicating solid liquidity and manageable debt levels. However, the company is unprofitable, with an operating margin of -13% and net margin of -10%, meaning it is currently losing money on operations.

Who at AAOI filed insider trades?

Recent insider filings for Applied Optoelectronics, Inc.
Date	Insider	Relationship	What happened	Value	Filing
12 Oct 2026	Murry Stefan J.	Chief Financial Officer	Open-market sale	$411,480.00	Form 4 for Murry Stefan J. (opens sec.gov in a new tab)
5 Oct 2026	Yeh Shu-Hua (Joshua)	*** See Remarks	Open-market sale	$720,180.00	Form 4 for Yeh Shu-Hua (Joshua) (opens sec.gov in a new tab)
15 Sept 2026	BLACK RICHARD B	Director	Gift	—	Form 4 for BLACK RICHARD B (opens sec.gov in a new tab)
10 Sept 2026	Murry Stefan J.	Chief Financial Officer	Open-market sale	$421,320.00	Form 4 for Murry Stefan J. (opens sec.gov in a new tab)
8 Sept 2026	Chang Hung-Lun (Fred)	*** See Remarks	Open-market sale	$3,545,676.12	Form 4 for Chang Hung-Lun (Fred) (opens sec.gov in a new tab)
18 Aug 2026	Yeh Shu-Hua (Joshua)	*** See Remarks	Open-market sale	$886,380.00	Form 4 for Yeh Shu-Hua (Joshua) (opens sec.gov in a new tab)

A disclosure, not a signal to trade. Source: SEC EDGAR (Form 4). Older filings and the 90-day buying-and-selling read are part of Pro. See plans

Common questions

What is AAOI's intrinsic value?
TickerWorth's blended fair value for Applied Optoelectronics, Inc. (AAOI) is $64.45 per share, versus a market price of $77.41 (priced within our range of $26.88 – $80.55).
Is AAOI overvalued or undervalued?
Priced within our range of $26.88 – $80.55 at $77.41. We don't call AAOI overvalued or undervalued from a range. This is an educational estimate, not advice.
What discount rate is used for AAOI?
A WACC of 15.2% and a terminal growth rate of 2.5%.
Is Applied Optoelectronics stock undervalued?
TickerWorth's fair value for Applied Optoelectronics, Inc. (AAOI) is $64.45 against a market price of $77.41. Our read: Priced within our range of $26.88 – $80.55. This is a model estimate, not investment advice.
Applied Optoelectronics (AAOI) DCF valuation and fair value
Our fair value for Applied Optoelectronics, Inc. (AAOI) is $64.45, built on a 15.2% discount rate (WACC) and 2.5% terminal growth. It blends our discounted-cash-flow model with other valuation lenses. Every assumption is listed on this page with its source.
What growth is priced into Applied Optoelectronics stock?
no growth rate up to 300%/yr justifies the price under these economics This is a reverse DCF: it holds our cash-flow model's other inputs and solves for the revenue growth that makes the model equal today's price of $77.41. A model estimate, not investment advice.
Applied Optoelectronics (AAOI) insider trading
The most recent insider filing (SEC Form 4) for Applied Optoelectronics, Inc. (AAOI): Murry Stefan J., Chief Financial Officer, open-market sale on 2026-10-12. The latest filings are listed on this page. A disclosure, not a signal to trade.