NVDA - Applied Optoelectronics: A Turnaround Could Be Around The Corner
2024-05-17 09:43:58 ET
Summary
- Applied Optoelectronics has come under pressure due to revenue and margin contraction in recent quarters.
- However, the company's pivotal Data Center segment is about to receive a major boost as operators upgrade their networks to meet increased demand due to AI boom.
- AAOI stock could see strong growth over the next three years.
Last year, I penned two bullish articles on fiber-optic equipment provider Applied Optoelectronics ( AAOI ) wherein I pointed out that the company’s business model transition would position it for long-term growth. Over the year, Applied Optoelectronics’ gross margins expanded by more than 1,000 basis points to around 30%, setting off a massive rally that took the shares from $1.90 at the beginning of 2023 to a 5-year high of $21.70 around mid-December 2023. Unfortunately, the shares have pulled back sharply to $11.00 currently thanks to several negative developments in the AOI’s business. Thankfully for AAOI bulls, I believe this company is on the cusp of a turnaround that’s likely to improve sentiment as the months and quarters roll on....
Applied Optoelectronics: A Turnaround Could Be Around The Corner