Applied Optoelectronics, Inc. (NASDAQ: AAOI) has begun construction on two adjacent properties in Pearland, Texas, adding nearly 400,000 square feet of manufacturing capacity to scale production of its 800G and 1.6T optical transceivers. These transceivers are critical components in modern AI infrastructures, enabling fast, long-distance data transmission over fiber optics. The expansion underscores AOI's commitment to meeting growing demand in the AI and cloud infrastructure markets.

The buildout is located at 14621 Kirby Drive and 11555 N. Spectrum Boulevard in Pearland. Dr. Stefan Murry, Chief Financial Officer and Chief Strategy Officer of AOI, highlighted the strategic importance of the expansion, citing access to a strong workforce and excellent infrastructure. The facilities are expected to play a key role in AOI's long-term growth strategy.

Quentin Wiltz, Mayor of Pearland, welcomed the expansion, noting its potential to bring high-quality jobs and strengthen the local economy. The project reflects Pearland's appeal as a destination for forward-looking companies and aligns with the city's efforts to deepen its innovation ecosystem.

Key Details of the Expansion

AOI supplies advanced optical and HFC networking products to tier-one customers across cloud computing, CATV broadband, telecom, and FTTH markets. The company has R&D facilities in Atlanta, GA, and engineering and manufacturing facilities in Sugar Land, TX, Taipei, Taiwan, and Ningbo, China.

Applied Optoelectronics, Inc. (NASDAQ: AAOI) suffered one of its worst trading sessions of 2026, with shares plunging 17% on Thursday. The decline followed comments from Meta Platforms, Inc. (NASDAQ: META) CEO Mark Zuckerberg regarding AI infrastructure spending, which sparked a broad sell-off across photonics stocks. Despite the sharp drop, the AI networking company remains up more than 205% year to date and over 320% in the past year, significantly outperforming Nvidia Corp (NASDAQ: NVDA), which has gained approximately 3% in 2026.

Market Reaction and Performance

Zuckerberg acknowledged that Meta's 2026 reorganization and layoffs had not been "perfectly smooth," fueling concerns that the AI infrastructure boom may be cooling. While he expressed confidence in delivering clearer returns from AI investments over the next three to six months, investors focused on the cautionary tone. The sell-off also impacted peers like Lumentum Holdings Inc. (NASDAQ: LITE) and Coherent Corp. (NYSE: COHR).

Future Outlook

Analysts suggest the sell-off may be an overreaction, pointing to continued supply constraints and healthy customer demand. Lumentum has previously indicated AI-related bookings extend into 2027. Investors will now monitor whether hyperscalers like Meta, Microsoft Corporation, Amazon.com, Inc., and Alphabet Inc. maintain sustained spending on optical networking hardware. If these investments hold, the recent decline could be viewed as a reality check rather than a long-term downturn.