Gaetano@crux_capital_
$AAOI We have more insight!
CFO Stefan Murry spoke at the Raymond James Conference yesterday
And it was filled with great nuggets.
Let's unpack!
1. The Firmware issue.
First off, we already have one milestone update from my linked post. They said the 800G firmware issue is RESOLVED.
Murry clarified that the firmware issue only delayed about $2 million of 800G shipments in Q4, but more importantly, he stated the issue is now resolved and the new firmware has shipped.
He explicitly confirmed that regardless of the Q4/Q1 shift, the massive 800G volume ramp starting in Q2 2026 is completely on schedule. Nice!
2. The InP laser moat is the industry bottleneck
The analyst asked about the news from yesterday that $NVDA is taking equity stakes/partnerships in $COHR and $LITE. Murry explained that hyperscalers are realizing that the absolute bottleneck in the AI supply chain right now is InP laser fabrication capacity.
Because $AAOI is one of the rare companies that actually owns its own laser fab and grows its own crystals, they are in a highly strategic position to capture this demand as hyperscalers scramble to secure long-term capacity.
3. U.S. manufacturing costs
I thought this was interesting to hear! And was something I was curious about on the watchlist with their Texas ramp.
Manufacturing their highly-automated transceivers in the U.S. only costs about 10% to 15% more than producing them in Asia. He noted that hyperscalers view securing their supply chain as an "existential" priority for their AI buildouts, so they are more than happy to absorb that slight cost increase to guarantee a secure, U.S.-made supply free from geopolitical risks.
4. Pricing power
Because the industry is so severely supply-constrained, Murry said that the historical standard of 15% to 20% annual price reductions is "not really on the table at this point". He also gave hard numbers on current pricing: 800G is selling for around $400, and 1.6T will be between $700 and $800. Again, interesting to hear.
5. The Mid-2027 $378M Monthly Target
Murry confirmed that their massive mid-2027 target of $378 million in monthly revenue is modeled specifically around the anticipated demand from three hyperscale customers. To hit this, they will initially scale in Taiwan this year, but by 2027, the vast majority of their 800G and 1.6T production will be physically located in the United States. So they really aren't backing down from this. Again, like I've mentioned, while this is very exciting we still need to closely track their execution to build more conviction in this number
6. A Pivot from LIDAR
The high-power, narrow-linewidth lasers that $AAOI needs to supply the upcoming CPO market were actually developed years ago for autonomous vehicle LiDAR applications. Because the self-driving car market didn't materialize as quickly as expected, they have perfectly pivoted that exact technology into powering AI data centers.
All in all, I thought this was a great follow on conference to a very talked about earnings!
What do you all think?
Also, thank you @Anointed_Ape for putting this on my radar, appreciate it!
