AAOI Dips 46% in Three Months: Should You Buy the Stock Now or Wait?

Applied Optoelectronics (AAOI) stock has declined 46.3% over three months due to production capacity constraints and component supply shortages, despite robust AI-driven demand for next-generation 800G and 1.6T optical transceivers. The company plans to expand manufacturing capacity to over 650,000 units monthly by year-end and expects 800G revenues to reach $217 million monthly by mid-2027. However, stretched valuation and intensifying competition from larger rivals remain concerns, leading to a Zacks Rank #3 (Hold) rating.