- AOI is a company that most people have never heard of
- But its data center optical transceivers are in hot demand due to the boom in AI
- The company is currently expanding its Texas manufacturing to keep up with demand
Applied Optoelectronics Inc. (AOI) has manufactured advanced optical and HFC networking products for data center and cable operators since 1997. But because most of its manufacturing was done in China and Taiwan, and the company did virtually no marketing, many people have never heard of AOI.
However, the Sugar Land, Texas, company is currently experiencing a boom due to all the demand for its data center optical transceivers.
Todd McCrum, SVP and general manager for Broadband Access at AOI, said the company “is the best kept secret in the world, and it wants to let that secret out.”
It has two major lines of business: cable amplifiers and data center optical transceivers. And while the cable side of its business is doing well, it’s the data center side that’s causing the company’s stock to boom.
Since early January its stock has shot up from around $39 per share to about $100 per share today. McCrum attributed the steep rise to three things: i) The AI market is driving demand for its products; ii) It’s winning big deals with hyperscalers; iii) It’s expanding its U.S. manufacturing.
Earlier this month, AOI said it received its first volume order for its 1.6T data center transceivers from one of its long-time major hyperscale customers to support AI workloads. The company didn’t name the hyperscaler, but it’s known to work with the likes of Microsoft and Amazon.
Separately, the company disclosed in an SEC filing that it inked a $4 billion contract over the next 10 years with a wholly-owned Amazon subsidiary.
U.S.-based manufacturing
Even though AOI has done most of its manufacturing in Asia, it’s also manufactured in the U.S., and now, it’s increasing that for multiple reasons. One reason is because of geopolitical tensions between the U.S. and China. “A lot of companies in the hyperscale space want ‘Made in America,’” said McCrum.
In February it announced a 210,000-sq-foot manufacturing warehouse expansion in Sugar Land, Texas.
At the groundbreaking, Thompson Lin, founder and CEO of AOI, said, “We plan to increase our investment in this facility and our headquarters from $150 million to potentially $300 million by the end of next year. We believe this expansion project will position us as one of the largest domestic suppliers of optical transceivers for the AI and data center industry.”
By the end of this year, it expects to have the largest production capacity for 800G and 1.6T transceivers in the U.S. Its two main competitors for these products are Lumentum Holdings and Coherent, both of which are based in California.
McCrum said the new factory will be highly automated, which is important in the U.S. where the labor supply is tighter than in Asia. “What that means for us is, we don't need to hire 10,000 people, which is hard,” he said. “We don't need to train 10,000 people.”
In summing up AOI’s seemingly sudden success (even though the company has been around for decades) McCrum said, “I think everybody realized there's only a handful of companies that can do this technology.”
2025 earnings
On February 26, AOI reported its fourth quarter and full year 2025 results, posting $456 million in total revenue for the year, an 83% increase compared to 2024.
“It was what all of our investors had been waiting to see for a few years,” said McCrum. “They knew we had the technology. They just were waiting for their time.”
Uttam Dey, an investment analyst writing for Seeking Alpha, said of AOI's 4th quarter and year-end 2025 earnings report, “It was the guidance from management that violently catapulted shares. Management’s outlook for its data center business was extremely high-caliber, projecting a 3.5x increase in data center revenues, leading me to adopt a bullish view on AOI.”