● Entry Point: Potentially enter at $24.
● Stop Loss: Set a stop loss at $18, allowing for a maximum downside risk of approximately 25%, in case the price breaks below key support.
● Take Profit: Aim for a target price of $34, which represents about 41.6% potential upside from the entry point.
● Explosive Revenue Growth: AAOI delivered a 145% year-over-year revenue increase in Q1 2025, driven by record cable broadband sales and rising demand in its data centre segment, signalling product market fit and execution in high-growth industries.
● Strategic AI Infrastructure Exposure: The company is scaling production of its high-speed 800G optical transceivers, which are critical for AI data centres, to 100 000 units per month by the end of 2025, with 40% of this capacity based in the US. This expansion is supported by three new design wins from a major hyperscale customer, setting the stage for a strong sales ramp in the second half of the year.
The share price has closed above the 200-day simple moving average (SMA), indicating a potential shift to an upward trend. It’s now testing a key resistance level at $23.89. A confirmed close above this level could trigger further upside. Additionally, the price has closed above the upper Bollinger Band, signalling strong bullish momentum and growing buying pressure.
● Market Volatility: As a small-cap tech stock, AAOI tends to exhibit volatile price swings, especially during broader semiconductor market downturns.
● Customer Concentration: Revenue relies heavily on a few large clients in the data centre market, which may increase order risk.
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** This article was prepared by BROKSTOCK analyst Maboko Seabi
