Just some key points from $Applied Optoelectronics(AAOI.US) earnings call today.

TLDR: Q4 is very important as management have informally guided ~$330M of 800G/1.6T revenue.

1. Demand is 20-40% above what $Applied Optoelectronics(AAOI.US) can supply. Customers keep pressing them to accelerate delivery.

- Like I said earlier, $Applied Optoelectronics(AAOI.US) is now a manufacturing story, not a demand story.

- I.e. can they produce enough to fulfil demand?

2. Q3 guided to $255-$290M which is +130% YoY and +42% sequentially at the midpoint.

- Management stated ~$330M of combined 800G & 1.6T revenue in Q4 alone.

- Implies Q4 revenue to be ~$480-500M, a potential 2x sequentially.

- I can't remember a Western optics company ever reporting growth at that cadence. Which makes Q4 the most important quarter, above Q2 and Q3.

- $Applied Optoelectronics(AAOI.US) stuck to their estimated $471M monthly transceiver revenue in 2027, which they mentioned last quarter.

I was expecting 60-80% sequential revenue growth, but $Applied Optoelectronics(AAOI.US) were hit by 100G revenue declining $20-25M because a customer couldn't source enough 100G switches due to memory shortages. If you add that "lost" revenue back, you get to a more reasonable ~50-55% growth.

3. 800G revenue

- $12.8M in Q2 which is >2x since Q1.

- Guided to grow ~5x in Q3 to ~$62M-$65M

- I mentioned earlier that "800G is a forward event that has to show up starting in Q2 and really in Q3" — great to see it happen on schedule.

4. 1.6T revenue

- $Applied Optoelectronics(AAOI.US) will be the fourth qualified supplier at one major hyperscaler.

- Full qualification expected within weeks w/ first shipments late Q3.

- >$200M order in hand with the bulk delivering in Q4.

- Q1 2027 1.6T revenue to double Q4 revenue.

- Customer demand indications of >500k units/month = $300-350M/month by end of 2027.

5. Capacity for 800G and 1.6T

- End of Q1 = 100,000 units

- Current = 200,000 units

- End of 2026 = 650,000 units

- End of 2027 = 930,000 units

So a ramp from Q1 -> Q2 as promised back in Q1.

New Texas facility for 800G/1.6T production starts up in late Q3, which frees their HQ building for InP wafer capacity expansion. Shows that modules and lasers are expanding in a clear/deliberate chain.

6. Capex

- Q2 capex was $565.5M incl. $280M of equipment prepayments.

- H2 capex intensity guided higher.

- No C Suite / Board prepays that much for equipment against weak demand signals.

7. CPO / ELSFP

- External laser source modules ramp late 2026 into 2027, targeting ~400k pieces/month by 2028.

- Total laser fab capacity +~300% by Q3 2027 plus a second Houston fab planned at ~4x the current facility's size.

- "Several major CPO customers love our laser, we just can't make enough"

Ofc, 400k/month in 2028 is two fabs and two years away. But it materially extends $Applied Optoelectronics(AAOI.US)'s moat duration as merchant EML scarcity eases in 2027-28 and deflates the original captive laser edge.

8. Chinese transceiver ban reports

- U.S. manufacturing is "the most important element of our appeal"

- Early customer feedback is that they'll "give us much more share" for U.S.-made supply.

- $Applied Optoelectronics(AAOI.US) expects to remain the largest U.S. AI transceiver manufacturer.

- With capacity booked through to Q2 2027, the response is clearly to add capacity more aggressively from ~Q3 2027.

9. InP substrates

- supply secured into end of 2027 across ~5 qualified suppliers (Europe, Japan, China).

- partnership/JV discussions with substrate suppliers for 2028–29 volumes.

- signals intent to integrate further downward as laser volumes 10x for CPO

Just initial thoughts on the things that stuck out to me most on the earnings call. I'm sure there's more stuff I'm missing rn.

I do believe though that the whole story now compresses into Q4's ~$330M of 800G/1.6T delivery.