INVESTOR PRESENTATION Fourth Quarter 2025 Nasdaq: AAOI 1 Forward Looking Statements & Non - GAAP Financial Measures This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by terminology such as "believe," "may," "estimate," "continue," "anticipate," "intend," "should," "could," "would," "target," "seek," "aim," "predicts," "think," "objectives," "optimistic," "new," "goal," " ...

Core Insights - Applied Optoelectronics (AAOI) is positioned to benefit from an AI-driven optical upgrade cycle, focusing on speed transitions, new architectures, and supply resilience [1] Group 1: Market Position and Performance - AAOI is experiencing a multi-year ramp to 800 gigabits per second, with a 1.6 terabits per second contribution expected in 2026, enhancing its domestic scale as a competitive advantage [2][8] - In the last three months, AAOI shares surged by 181.8%, significantly outperforming the Zacks Computer & Technology sector, which saw a decline of 7% [2] Group 2: Product Development and Capacity Expansion - AAOI anticipates that 800 gigabits per second transceivers will become its largest revenue line starting in Q2 2026, with 1.6 terabits per second contributing later that year [5][8] - The company aims to produce over 500,000 units per month of 800 gigabits per second and 1.6 terabits per second combined by the end of 2026, with demand projected to exceed production capacity through mid-2027 [7][8] Group 3: Manufacturing and Supply Chain Strategy - AAOI is expanding its manufacturing capacity in Texas, with plans to triple laser capacity by mid-2027 and a new facility in Sugar Land expected to begin scaling by mid-to-late 2026 [11][12] - As of Q4 2025, less than 10% of the component value for 800 gigabits per second and 1.6 terabits per second was sourced from China, enhancing supply resilience [12] Group 4: Financial Outlook and Profitability - For Q1 2026, AAOI projects a gross margin of 29% to 31%, with expectations of sustainable non-GAAP profitability beginning in Q2 2026 [13][16] - The long-term gross margin target is approximately 40%, with transceiver-only gross margin milestones set for 2027 [16]

Company Overview - Applied Optoelectronics (AAOI) manufactures fiber-optic networking products for cable TV, fiber-to-the-home, and data center markets, producing laser transceivers that bridge electrical and optical communication, essential for the AI revolution due to their ability to handle high-speed data flow [1] - The rising prices of copper make fiber optic cables increasingly valuable [1] Recent Developments - AAOI secured its first volume order of 800G transceivers from a major hyperscale customer, rumored to be Amazon, which will positively impact AAOI's revenues [2] - Major tech contracts often lead to additional orders as new data centers are established [2] Market Demand and Stock Performance - Following the contract win, AAOI shares have surged over 20% in a single session, with trading volume exceeding twice the normal levels, indicating strong institutional demand [3] - Approximately 18% of the stock's float is short, suggesting potential for a short squeeze in the near future [5] Revenue Growth Projections - Analysts project AAOI's revenues to grow by 67% in 2026, with expectations for upward revisions due to the hyperscaler deal [7] - Current sales estimates for AAOI include $134.34 million for the current quarter and $761.96 million for the next year, reflecting significant year-over-year growth [8] Industry Trends - Data center spending is expected to increase significantly, building on strong performance in 2025 [9] - The competition among large language models (LLMs) is driving increased spending, with 2026 anticipated to see the emergence of robots and physical AI, both requiring extensive data center resources [11] - AAOI has several financially robust customers, including Oracle and Microsoft, likely to increase their AI-related spending [12] Strategic Positioning - As the demand for high-performance networking hardware grows amid the AI race among tech giants, AAOI is well-positioned to benefit from the transition away from copper and the expansion of data centers [13]

Industry Insights - The AI supercycle is continuing to thrive, leading to an increased demand for data center infrastructure upgrades [1] - There is a notable transition occurring from 800G to 1.6T transceivers, indicating a significant technological advancement in the industry [1] Investment Opportunities - The current market conditions present an ideal opportunity for investment in companies involved in data center infrastructure and transceiver technology [1]

Core Insights - Coherent Corp. (COHR) and Arm Holdings plc (ARM) are key players in the high-growth tech infrastructure sector, with Coherent focusing on optical materials and semiconductors, while Arm specializes in semiconductor and software design [1] Group 1: Coherent Corp. (COHR) - Coherent reported a 17.3% year-over-year increase in revenues for the first quarter of fiscal 2026, driven by strong demand in the AI sector [2] - The company achieved a 1,081-basis-point year-over-year expansion in operating margin, indicating effective scalability essential for growth in the AI market [2] - Coherent's diverse product pipeline, including the rapid adoption of 800G transceivers, positions it well to meet the increasing demand for AI [3] - The company has a strong balance sheet with $875 million in cash reserves and only $48 million in debt, providing flexibility for investments [4] - Despite its growth trajectory, Coherent faces competitive pressure in the Silicon Carbide (SiC) market from companies like Wolfspeed and ON Semiconductor [5] - The Zacks Consensus Estimate for COHR indicates a 15.1% growth in sales and a 44.5% increase in EPS for fiscal 2026 [10] Group 2: Arm Holdings plc (ARM) - Arm Holdings benefits from a dual-sided network effect that connects software creators and hardware manufacturers, enhancing its position in mobile technology [6] - The company is recognized as a significant player in the AI and IoT sectors, with major clients like Apple, Qualcomm, and Samsung relying on its energy-efficient architecture [7] - However, ARM faces risks in China as local companies shift towards RISC-V, which could impact its growth in that market [8] - The Zacks Consensus Estimate for ARM shows a 21.5% growth in sales and a 5.5% increase in EPS for fiscal 2026 [11] - ARM is trading at a forward P/E ratio of 52.89, significantly higher than Coherent's 34.72, indicating a valuation gap [12] Group 3: Investment Recommendation - Coherent is recommended for portfolio addition due to its higher EPS growth outlook, attractive valuation, and robust liquidity position, despite ARM's dominance in mobile architecture [14]

Core Insights - Coherent Corp.'s growth strategy is heavily focused on capturing opportunities in the expanding AI markets, with a notable 23% year-over-year growth in its AI datacenter business in Q1 of fiscal 2026 [1][8] Group 1: Product Demand and Market Growth - The company has experienced high demand for its products, particularly due to direct bookings, with CEO James Anderson noting the broad adoption of 800G and rapid uptake of 1.6T transceivers [2] - Coherent's Optical Circuit Switch is projected to add over $2 billion in addressable market opportunity in the long term, directly addressing the AI market [4] - The global AI market is expected to grow at a CAGR of 30.6% through 2033, indicating a favorable environment for Coherent's products [4] Group 2: Production and Technological Advancements - Coherent has achieved higher yields in 6-inch Indium Phosphide (InP) production compared to 3-inch, which is critical for next-gen AI infrastructure [3] - The company has commenced 6-inch InP production in Jarfalla, Sweden, to meet rising demand, which is anticipated to increase alongside AI growth [3][8] Group 3: Financial Performance and Valuation - Coherent's stock has increased by 73.7% over the past year, significantly outperforming the industry average growth of 14% [5] - The company trades at a forward price-to-earnings ratio of 32.19, which is higher than its peers LiveRamp and GigaCloud Technology [9] - The Zacks Consensus Estimate for Coherent's earnings for 2026 and 2027 has risen by 11.4% and 5.1%, respectively, over the last 60 days [12]

Core Insights - Applied Optoelectronics, Inc. (AOI) reported strong financial results for Q3 2025, with revenue and gross margin meeting expectations, driven by high demand in the CATV business and significant orders for 1.8 GHz amplifier products [2][6] - The company is nearing completion of 800G product qualification and anticipates meaningful shipments in Q4 2025 [2] - Despite strong CATV performance, datacenter revenue fell slightly below expectations due to shipment delays [2] Financial Performance - GAAP revenue for Q3 2025 was $118.6 million, a significant increase from $65.2 million in Q3 2024 and $103.0 million in Q2 2025 [6] - GAAP gross margin was 28.0%, up from 24.4% in Q3 2024 but down from 30.3% in Q2 2025; non-GAAP gross margin was 31.0%, compared to 25.0% in Q3 2024 and 30.4% in Q2 2025 [6] - GAAP net loss was $17.9 million, or $0.28 per share, compared to a net loss of $17.8 million, or $0.42 per share in Q3 2024, and a net loss of $9.1 million, or $0.16 per share in Q2 2025 [6] Business Outlook - For Q4 2025, AOI expects revenue in the range of $125 million to $140 million, with non-GAAP gross margin between 29% and 31% [7] - Non-GAAP net loss is projected to be between $9.0 million and $2.8 million, translating to a loss per share of $0.13 to $0.04 [7] Operational Developments - The company is expanding production capacity in the U.S. and Taiwan, with plans to reach a monthly production capacity of approximately 100,000 units of 800G transceivers by year-end, with 35% of production in the U.S. [2] - AOI continues to secure new customers and maintain momentum with existing large customers, contributing to record CATV revenue [2] Market Position - AOI is recognized as a leading developer and manufacturer of advanced optical and HFC networking products, serving tier-one customers across various sectors including cloud computing, CATV broadband, telecom, and FTTH markets [14]

Industry Overview - The Technology Services industry has experienced significant growth since the pandemic, driven by the rapid adoption of remote work and advancements in technology such as 5G, blockchain, AI, and ML [1] - The industry includes companies that produce, develop, and design software support, data processing, computing hardware, and communications equipment, catering to both consumer and business markets [2] Future Prospects - The demand for services in the industry remains healthy, with revenues and cash flows expected to return to pre-pandemic levels, supporting stable dividends for most players [3] - The sector benefits from broader economic recovery, with GDP growing at an annual rate of 3.8% in Q2 2025 and a Services PMI remaining above 50% for 11 of the past 13 months [4] Technological Advancements - The global shift towards digitization presents opportunities in markets such as 5G, blockchain, and AI, with the GenAI market projected to reach $59 billion by 2025 and a CAGR of 37.6% from 2025 to 2031 [5] Market Performance - The Zacks Technology Services industry ranks 94, placing it in the top 39% of over 243 Zacks industries, indicating strong near-term prospects [6][7] - Over the past year, the industry has outperformed the broader Zacks Business Services sector, increasing by 53% compared to a 7.5% decline in the sector and a 17.9% rise in the S&P 500 [8] Current Valuation - The industry is currently trading at an EV-to-EBITDA ratio of 17.19X, compared to the S&P 500's 18.33X and the sector's 10.49X, with a five-year trading range of 8.85X to 17.19X [11] Company Highlights Futu Holdings - Futu Holdings, a digital securities brokerage, reported a 69.7% year-over-year revenue increase in Q2 2025, with a significant operating margin expansion [16] - The company added 262,000 funded accounts, reaching a total of 2.7 million, with a 42% year-over-year growth in funded accounts [17] - Futu Holdings has a Zacks Rank 1 (Strong Buy), with earnings expected to grow 74.7% year-over-year in 2025 [18] Dave - Dave, a financial services platform, added 843,000 members, resulting in a 60% year-over-year revenue increase in Q3 2025 [19] - The company raised its full-year revenue guidance to $544-$547 million, up from $505-$515 million [21] - Dave holds a Zacks Rank 1, with earnings expected to soar 98.5% year-over-year in 2025 [22] Coherent Corp. - Coherent Corp. experienced a 16.4% year-over-year revenue growth in Q4 2025, driven by demand for 800G transceivers [23] - The company introduced a new 1.6T transceiver, contributing to improved profitability with a non-GAAP gross margin increase of 290 basis points [24] - Coherent has a Zacks Rank 2 (Buy), with earnings expected to rise 30% year-over-year in fiscal 2026 [25]

Summary of Zhongji Innolight Co Ltd Conference Call Company Overview - **Company**: Zhongji Innolight Co Ltd (300308.SZ) - **Industry**: Greater China Technology Hardware - **Current Stock Price**: Rmb403.68 - **Market Capitalization**: Rmb448,536 million - **Price Target**: Raised to Rmb475.00 from Rmb435.00, indicating an upside potential of 18% [1][4][6] Key Financial Insights - **Earnings Estimates**: - **3Q25**: Gross margin assumption increased from 40.0% to 41.8%, leading to a 6% upward revision in earnings estimates for the quarter [2][8] - **2026**: Earnings estimates raised by 4%, with gross margin assumptions increased from 40.6% to 41.9% [3][11] - **2027**: Earnings estimates raised by 6%, with gross margin assumptions increased from 41.2% to 42.4% [3][11] - **Revenue Projections**: - **2025**: Expected net sales of Rmb38,858 million, representing a 63% year-over-year growth [15] - **2026**: Expected net sales of Rmb72,366 million, representing an 86% year-over-year growth [15] - **2027**: Expected net sales of Rmb86,427 million, representing a 19% year-over-year growth [15] - **Net Profit**: - **2025**: Expected net profit of Rmb10,762 million, a 108.1% year-over-year increase [15] - **2026**: Expected net profit of Rmb21,053 million, a 95.6% year-over-year increase [15] - **2027**: Expected net profit of Rmb25,688 million, a 22.0% year-over-year increase [15] Market Position and Competitive Advantage - **Product Focus**: The company is positioned to capitalize on the 1.6T new product cycle, leveraging its first-mover advantage and leading R&D capabilities in silicon photonics [4][8] - **Innovation Leadership**: Expected to lead the industry in high-end transceiver products in 2026 and 2027 [4][8] - **Pricing Power**: Anticipated stronger demand for 1.6T products is expected to positively impact pricing and margins [3][11] Risk Factors - **Market Competition**: Intense competition could lead to lower market share, margins, and average selling prices (ASPs) [26] - **Demand Fluctuations**: Weaker-than-expected orders could negatively impact financial performance [26] Investment Thesis - **Overweight Rating**: The stock is rated as Overweight, indicating expected performance to exceed the average total return of the industry [6][22] - **Growth Drivers**: Anticipated significant revenue upside from 800G and 1.6T products in 2025-2026 [22] - **Long-term Outlook**: Positive momentum expected to continue following solid earnings growth in the first half of 2025 [22] Additional Insights - **Valuation Methodology**: Price target derived using a residual income methodology, with a cost of equity of 10% and a long-term growth rate of 3.5% [16] - **Consensus Price Target Distribution**: Ranges from Rmb185.00 to Rmb570.00, indicating varying market expectations [17] This summary encapsulates the key points from the conference call regarding Zhongji Innolight Co Ltd, highlighting its financial performance, market position, and investment outlook.

Core Insights - Fabrinet's position as a leading optical packaging specialist is increasingly strategic due to the industry's shift towards higher bandwidth requirements and advanced data center architectures [1] - The demand for optical packaging is expected to remain strong, driven by artificial intelligence workloads and cloud computing expansion [2] - The complexity of modern optical packaging is increasing as networks migrate to higher speeds, supporting premium revenue streams [3] - High-performance computing (HPC) is expected to further expand demand for advanced optical packaging, with Fabrinet recognizing its unique requirements [4] - Competition in the optical packaging market is intensifying, with rivals like Lumentum Holdings and Coherent Corp also targeting similar demand trends [5] - Fabrinet's share price has significantly outperformed industry averages, reflecting strong market performance [6] - The stock is currently trading at a forward Price/Sales ratio higher than the industry average, indicating a premium valuation [9] - The Zacks Consensus Estimate for Fabrinet's earnings indicates strong year-over-year growth expectations [11] Group 1 - Fabrinet's expertise in precision optical assembly and packaging technologies positions it at the center of infrastructure developments reshaping global connectivity [1] - Optical communications revenue reached $689 million in Q4 fiscal 2025, up 15% year over year, with telecom revenue climbing 46% to $412 million [2] - The sophistication of optical packaging supports premium revenue streams, with 800G and faster products generating $313 million in the quarter, up 21% from the prior year [3] Group 2 - The decision to classify HPC as a distinct revenue category reflects its unique requirements and growth potential [4] - Lumentum Holdings and Coherent Corp are also well positioned to benefit from the same drivers of AI workloads and cloud computing expansion [5] - Fabrinet's shares have jumped 64.7% YTD, outperforming the Zacks Electronics-Miscellaneous Components industry and the Zacks Computer and Technology sector [6] Group 3 - Fabrinet's stock is trading at a forward 12-month Price/Sales ratio of 3.05X compared to the industry's 2.08X [9] - The Zacks Consensus Estimate for Fabrinet's first quarter fiscal 2026 earnings is pegged at $2.83 per share, indicating 18.41% year-over-year growth [11]