$AAOI

AAOI is in optical networks and data transmission (networking).
In AI data centers, tens of thousands of GPUs (Nvidia chips) work at the same time. These chips need to share massive amounts of data with each other at millisecond-level speed. Copper cables cannot handle this speed and bandwidth; data traffic must flow at the speed of light. AAOI produces the high-speed fiber optic transceivers (at 400G, 800G, and 1.6T speeds) and laser components that carry this data at light speed. In short, it is one of the companies building the nervous system of the data center.
A very large portion of its revenue depends on a few tech giants (especially historically Microsoft and Amazon). A single new order headline from one of these giants can send the stock to space, while even the slightest slowdown in orders can pull the stock sharply lower.
AAOI has historically been one of the most heavily shorted stocks in the market. This also causes incredibly sharp short-squeeze rallies when good news arrives.
In the AI infrastructure cycle, investors first rushed into chip makers (Nvidia), then cooling/power systems. Right now, the biggest next bottleneck in the sector is network and communication speed. No matter how fast the chips are, if the optical networks carrying the data are slow, the system gets clogged. AAOI sells the exact products that can solve this bottleneck.
It will report earnings on Thursday after market close. Expectations are as follows:
EPS Normalized Estimate -$0.11 EPS GAAP Estimate -$0.15 Revenue Estimate $128.24M
After earnings, a massive move of 15% to 25% in either direction is expected in the stock. Short Interest is 16.94%. The company’s CFO sold a high amount of shares before earnings, ...