Applied Optoelectronics Bets Big on AI with Major Texas Manufacturing Hub

Applied Optoelectronics is making a substantial strategic move to capitalize on the artificial intelligence boom, launching a significant U.S. expansion. The optoelectronics specialist is channeling more than $150 million into constructing a new Texas-based production facility specifically for AI data center components, a timely investment aligned with surging market demand.

This ambitious growth initiative follows the company's successful negotiation of a landmark, multi-year supply agreement with Amazon valued at $4 billion. The new plant, located in Sugar Land, Texas, will span 210,000 square feet and is scheduled for completion by the summer of 2026. Upon becoming operational, it is poised to become the largest production site for AI data center transceivers in the United States. The city of Sugar Land is supporting the project with a $2 million incentive package, and the development is expected to create 500 new jobs.

To support its expanded commitments, Applied Optoelectronics has outlined an aggressive production ramp-up plan:

Should investors sell immediately? Or is it worth buying Applied Optoelectronics?

• Manufacturing capacity exceeding 100,000 800G units per month by the end of 2025
• A subsequent increase to over 200,000 units monthly by mid-2026
• A commitment to producing 40% of its total output within the United States

Financial Performance Reflects Surging Demand

The company's strategic focus is already yielding impressive financial results. For the second quarter of 2025, Applied Optoelectronics reported a dramatic 137% revenue surge, reaching $103 million. This substantial growth was primarily driven by robust performance in its data center and CATV business segments.

While the company advances its research and development in next-generation 800G and 1.6Tb transceivers, it continues to experience rising customer interest. However, its significant reliance on a few major clients, such as Amazon, remains a point of consideration for market observers assessing potential concentration risks.

All Eyes on Upcoming Quarterly Results

The market's attention is now turning to the company's next quarterly earnings report, scheduled for release on Thursday, November 6, 2025. Investors and analysts will be closely scrutinizing the growth metrics for its AI-focused product lines and the latest progress on the Texas facility construction. A positive stock price reaction to the expansion announcement in late October has already signaled a wave of investor optimism. The key question remains whether Applied Optoelectronics can meet these high expectations and solidify its standing within the highly lucrative AI infrastructure market.