AAOI vs. COHR: How Much Upside Is Left?

TLDR

There's a lot of thematic content on names like AAOI and COHR. Decent financial analyses are harder to find. I'm filling that void. Both names are risky; both names have significant upside and they have an indiscernible downside if growth in optics does not materialize. That's not ideal. Warren Buffett would not buy either name - buying dollars for 50 cents is easier said than done. So, we're looking at the expensive names (and I'm one of the biggest AI bulls around).

Valuation:

• Base case: using the lower end of management's guidance both names have around ~35% upside
• Bullish case: using the higher end of management's guidance both names have around ~100% upside

Overview

COHR and AAOI both manufacture 800G and 1.6T transceivers, although COHR is significantly larger in terms of revenue and product breadth. COHR also has exposure to adjacent optical technologies such as optical circuit switches and integrated photonics, while AAOI remains a more concentrated play on datacenter transceiver demand.

COHR

COHR has TTM revenue of $7 billion and net income of $770 million. Management is guiding Q1 '27 (their FY ends in June; so we're in Q1 '27 now) revenue to $2.2 - $2.5 billion and EPS to $1.85 - $2.05 - both metrics are projected to increase QoQ by approximately 8 - 18%.

AAOI

AAOI data center segment of the business has TTM revenue of $595 million and lost $57 million. Technically, they also have a CATV (cable television) side of the business which generates about $80 million in quarterly revenue and is projected to grow to $100 million, but the valuation of the business rests squarely on the data center segment so we'll focus on that.

Management at AAOI is guiding to huge revenue growth. They're guiding Q3 '27 revenue to be $1.4 billion, compared to Q2 '26 revenue of $107 million. That was not a typo. They're projecting a one year increase in revenue of ~13x. Specifically, on the Q1 earnings call they said "by mid‑2027, 100G and 400G revenue will be approximately $90 million monthly, 800G revenue will be approximately $217 million monthly, and 1.6T revenue will be approximately $164 million monthly. In total, this is about $471 million per month of data center transceiver revenue."

Dilution:

As of August 3, 2026, there were 84,569,237 shares of the registrant’s Common Stock outstanding. On the Q2 earnings call, management is guiding "to using a weighted average diluted share count of approximately 92.8 million shares."