Applied Optoelectronics (AAOI) stock was trading around $129.10 per share before falling roughly 10% in after-hours trading on Friday, August 22. The decline followed the company’s filing for another $600 million at-the-market (ATM) stock offering, adding to a year in which the company has repeatedly tapped equity markets to fund expansion.

The new offering will be managed by Raymond James and Needham, which will earn a commission of up to 2% of gross sales. Shares may be sold directly on the Nasdaq Global Market, through market makers, or in private transactions.

This is not the first time AAOI has used the ATM market in 2026. The company completed a $500 million ATM program in April, then launched another $600 million facility in May. By the end of June, it had raised roughly $1.05 billion through these programs and sold close to 7.8 million common stock units.

Investors have been dealing with dilution concerns throughout the year, and Friday’s announcement of another $600 million facility appeared to trigger the after-hours drop.

Record Growth Is Driving the Capital Raise

The company says the capital is being used to support expansion. AAOI is enlarging its Pearland, Texas, manufacturing facility by nearly 400,000 square feet to increase production of 800G and 1.6T optical transceivers used in AI data centers.

Applied Optoelectronics expects demand for those products to remain above production capacity through mid-2027. To narrow that gap, the company is targeting monthly output of about 650,000 units by year-end, up from roughly 200,000 units per month when second-quarter results were released.

Second-quarter results were strong. Revenue reached a record $191.9 million, up 86% year over year, marking five straight quarters of record sales. The company returned to non-GAAP profitability with earnings of $0.06 per share, and 800G volumes more than doubled from the prior quarter.

Third-Quarter Outlook Remains Strong

Management guided third-quarter revenue to a range of $255 million to $290 million. Non-GAAP earnings per share are expected to be between $0.11 and $0.26.

The combination of rapid sales growth, expanding capacity, and repeated equity raises helps explain why the stock can react sharply to financing news even while operating trends remain strong. Wall Street remains broadly positive on the stock despite Friday’s after-hours reaction. AAOI carries a Moderate Buy consensus rating, based on three Buy ratings and two Hold ratings. The average 12-month price target is $163.40, about 31% above Friday’s closing price.