Jim Cramer advises avoiding Applied Optoelectronics shares due to overbought conditions despite strong Q1 revenue growth.
Jim Cramer cautioned investors against purchasing Applied Optoelectronics (NASDAQ:AAOI) stock, citing its parabolic rally as unsustainable. The comment came during a segment where he dismissed dot-com era comparisons for the fiber-optics sector.
Applied Optoelectronics reported Q1 2026 revenue of $151.1 million, up 51.3% year-over-year but missing estimates by $3.71 million. Non-GAAP EPS of -$0.07 also fell short by $0.02. The company guided Q2 revenue between $180 million and $198 million, with non-GAAP net results ranging from a $2.5 million loss to $2.8 million income.
The company supplies fiber-optic networking equipment to data centers, cable TV providers, and telecom manufacturers. Despite its growth, Cramer suggested AI stocks may offer better risk-reward profiles.