B. Riley downgraded Applied Optoelectronics to Neutral from Buy. The firm established a $129 price target.
New network architectures at Amazon and OpenAI create significant structural headwinds. These deployments could reduce the total number of required transceivers by 40% to 50%.
Amazon’s Resilient Network Graphs and OpenAI’s Multipath Reliable Connection (MRC) protocol drive a shift toward network flattening. Microsoft and Oracle are also reportedly integrating the open-source MRC protocol.
This shift challenges Applied Optoelectronics’ future growth forecasts for 800G and 1.6T transceivers. Amazon and Oracle represent key expected customers for these high-speed components.