$AAOI

Summary

The analyst holds long positions in AAOI and AEHR with high conviction, expecting strong demand and capacity ramp for AAOI and follow-on orders for AEHR, despite recent volatility.

Reasoning

AAOI is expected to reach ~$471M monthly transceiver revenue by mid-2027 with capacity ramping for 800G/1.6T and demand exceeding production until Q3 2027. AEHR received follow-on orders from a SiPho customer and is a qualified supplier with potential more orders, plus earlier orders from a lead hyperscale customer.

I have high conviction in $AAOI and $AEHR. And still hold my positions. With $AAOI: > Target ~$471M monthly transceiver revenue mid-2027. > Capacity ramp is happening now for 800G/1.6T. > Even with capacity expansion, demand is expected to exceed production capacity until ~Q3 2027. With $AEHR: > They just got a follow-on order from their SiPho customer for more WLBI systems. > Potentially more orders later this year from the customer (maybe $INTC or $JBL) - so are now a fully qualified supplier. > On top of orders earlier in the year from their lead hyperscale customer for PLBI systems ($GOOGL / $MSFT). I personally hold a decent chunk of both names. But they're probably two of the highest beta stocks out there right now, so have been swept up in the broader AI selloff most aggressively. All part of the game when you hold small cap / volatile names. Just have to ride the noise out into a longer time horizon.

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