Why I'm all in on AAOI

$Applied Optoelectronics(AAOI.US) A core undervalued logic: a local, secure alternative to NVIDIA's AI compute chain.

In NVIDIA's current 800G/1.6T optical module procurement, Zhongji Innolight + Eoptolink account for over 60% combined, with Innolight alone taking nearly 70% in the 1.6T phase. Against the backdrop of geopolitical competition, supply chain diversification is a necessity, not an option, for North American cloud providers and NVIDIA.

However, the pool of local players in North America capable of handling large-scale delivery is extremely limited:

Coherent has comprehensive technology but a complex business portfolio; optical modules are not its core focus, and it lacks sufficient local compliant capacity.

Lumentum is a leader in upstream chips but hardly delivers complete modules.

Intel's silicon photonics are largely for its own Gaudi systems, with negligible external sales.

AAOI is the only large-scale alternative that truly meets the criteria of "pure data center focus + full-process US domestic capacity + TAA compliance + aggressive expansion."

Several solid pieces of evidence support this:

▫️ Received $20.85 million in subsidies under the Texas CHIPS Act (HB 5174), supporting a $279 million domestic expansion, aligning with federal CHIPS Act strategy.

▫️ 2-3 top cloud providers have locked in all high-end capacity for H1 2027, with Amazon's first 1.6T order exceeding $200 million.

▫️ BlackRock increased its stake by 35.54% in 2026Q1, holding 9.11% of total shares outstanding; institutional holdings exceed 60% of the market.

Simply put, it's profiting not just from AI bandwidth upgrades but also from the long-term dividend of US compute supply chain autonomy. The scarcity of this strategic position is not yet fully priced in by the market.

$Applied Optoelectronics(AAOI.US)$Tradr 2X Long AAOI Daily ETF(AAOX.US)

References and Data Sources

1. NVIDIA optical module procurement share: Based on Dell'Oro Group, LightCounting Q1 2026 optical communications industry reports, and North American cloud provider supply chain research data.

2. Texas subsidy and legislative basis: Official announcement from the Texas Governor's Office on April 29, 2026, corresponding to the Texas CHIPS Act (HB 5174) Semiconductor Innovation Fund project, with a total investment of $279 million.

3. Capacity and order planning: From Applied Optoelectronics (AAOI) 2026 Q1 financial report and management earnings call transcript.

4. Institutional holding data: From US SEC 2026Q1 13F filings and BlackRock official holding reports.

5. Peer business comparison: From Coherent, Lumentum, Intel 2025 annual reports and publicly disclosed business structure information.