The financial report of AAOI should be one of the strongest evidence supports the recent outbreak of optical interconnection: 1. Q2 total revenue was $191.9 million, with a year-on-year increase of 86.4% and a month on month increase of 27.0%, setting a record for the fifth consecutive quarter. Among them, the data center revenue was 107.7 million US dollars, a year-on-year increase of 140.4% and a month on month increase of 32.3%, accounting for 56% of the total revenue The revenue from Cable TV was 80.58 million US dollars, with a year-on-year increase of 43.8% and a month on month increase of 20.6%. The Q3 guidance is very strong: Revenue ranged from 255 million to 290 million US dollars, with a median of 272.5 million US dollars, representing a month on month increase of approximately 42%. Non GAAP gross profit margin of 29% -30.5%, net profit of $10.1 million - $24 million Based on revenue, gross profit margin, and the company's projected non GAAP expenses of $70-80 million per quarter, the Q3 non GAAP operating profit is roughly between a loss of $6 million and a profit of $18.5 million. In other words, Q3 may cross the operating break even point. 2. The first key signal of the phone conference: 800G officially enters the turning point of mass production from the certification period 1) The absolute revenue of 800G in Q2 is still not significant, but the growth curve has become noticeably steep AAOI Q2's 800G revenue is $12.8 million Accounting for 11.9% of data center revenue, with a year-on-year growth of over 10 times and a month on month growth of over double. The revenue of 800G in Q1 was only $4.6 million, so it actually increased by about 178% from Q1 to Q2. More importantly, the company expects Q3 800G revenue to increase nearly fivefold month on month, meaning Q3 800G revenue may reach around 60-64 million US dollars. At the same time, 400G revenue reached $48.4 million, accounting for 45% of data center revenue, a month on month increase of 27.4%, and a year-on-year increase of more than four times. This indicates that the current AAOI400G continues to grow and form the income base, while 800G enters a new round of S-shaped climbing on it. This is of great significance to the entire optical module industry: the demand for optical interconnection in AI data centers is not only concentrated in one speed generation, but also expands simultaneously with 400G, 800G, and subsequent 1.6T 2) The implied number of 800G in Q4 is extremely aggressive During the conference call, the analyst estimated that the combined revenue of 800G and 1.6T in Q4 may be approximately $330 million based on management's perspective. The CFO replied, "The direction is basically correct. The management subsequently stated that the promised 1.6T revenue for Q4 is approximately 70-80 million US dollars. From this, it can be inferred that: Q4 1.6T revenue of 70-80 million US dollars Q4 800G has an implied revenue of approximately $250 million to $260 million. Compared to Q2's $12.8 million, this means that 800G revenue may increase by about 20 times within two quarters. It's completely a large-scale increase in volume 3. The second key signal: 1.6T pluggable modules will be truly commercialized starting in Q4 2026 The 1.6T timeline provided by AAOI is more clear than before: the first 1.6T product is expected to complete final certification in the next 2-3 weeks, and initial shipments will begin at the end of Q3; The company already has over $200 million in orders, with the majority of the first orders expected to be delivered in Q4 and a small portion extending into Q1 2027; Q4 can promise a 1.6T revenue of approximately 70-80 million US dollars; The management stated that the 1.6T revenue in Q1 2027 may double or exceed that in Q4. The management also stated that the company is approaching becoming the fourth 1.6T certified supplier for a large Hyperscale. This indicates that Hyperscale is increasing the number of 1.6T suppliers, indicating customer concerns about insufficient production capacity from a single supplier, limited supply of critical components, geopolitical and manufacturing risks, new product yield, and delivery risks. It also confirms that US cloud giants are actively responding to potential supply chain geopolitical risks 4. The third key signal: CPO 1) AAOI's CPO high production window is mainly after Q3 2027, and the company currently only has very limited production of ELSFP external laser source products. It plans to expand in the second half of 2026 and continue to climb in 2027; The truly mass-produced CPO related products are expected to be available in the second half of Q3 2027 and are currently cooperating with at least five customers. This indicates that at least for AAOI, CPO is not a major source of revenue for 2026. 2) CPO will not simply reduce the optical value, but may significantly increase the demand for high-power laser production capacity The management stated that the area of CPO laser chips may be 6 times or more than existing products, and the next generation of DWDM CPO requires higher wavelength accuracy. Therefore, in order to meet the CPO demand, the manufacturing capacity of related lasers may need to be expanded by 8-10 times, and it will take 21-24 months from ordering equipment to achieving high mass production. This is one of the most valuable judgments in the industry for this phone conference. In the past, the market often believed that: CPO reduces the number of pluggable optical modules, resulting in a decrease in the value of optical communication. But the process data provided by AAOI suggests that the real changes may be: The optical value is shifting from complete pluggable modules to InP lasers with higher power, larger chip area, and lower yield requirements, external laser sources, optical engines, and advanced packaging. Even if the number of modules is reduced, the requirements for wafer area, epitaxy, wavelength control, packaging, and testing for each light source may significantly increase. 3) Based on AAOI, the rhythm of CPO is more likely to be: 2026: Large volume of 800G pluggable modules; 2026Q4 to 2027: Large volume of 1.6T pluggable modules; After the second half of 2027, CPO external laser sources and related light engines will begin to form a scale; 2028: CPO related lasers enter larger scale production. 5. The fourth key signal: the core contradiction is the system level supply chain constraint The optical interconnect industry is shifting from "whether there is demand" to "who can deliver", and short-term limiting factors have become: Inp, DSP, switches and their memory, automated assembly, final testing, high-speed product yield, and capacity ramp up. This type of environment is usually more favorable for suppliers with critical components, vertical integration, and capital strength. Recent bottlenecks: DSP, TIA, module assembly, testing, and yield; Potential bottlenecks: High power InP lasers, epitaxy, wafer processing, and related equipment 6. The fifth key signal: Made in the United States is becoming a real procurement consideration The management of AAOI stated that American manufacturing is an important factor for customers to choose AAOI, and by the end of 2027, more than half of the 800G and 1.6T production plans will come from Texas. This indicates that Hyperscale's procurement standards are expanding from simple price and performance to include supply chain security, geopolitical risks, and delivery controllability, leading downstream customers to implement multi vendor configurations. Overall, this financial report indicates that the industry demand has been confirmed, and AAOI can also be considered as one of the validation samples for the progress of the 800G, 1.6T, and CPO industries. The financial quality needs further validation in Q3 and Q4. It can be confirmed that AAOI is currently and is expected to continue to be the largest AI optical interconnect manufacturer in the United States