2 Oversold Optoelectronics Stocks to Buy Now

Fiber optics is a focal point of the AI trade.

And the theme has been decimated…creating bargains.

Here are 2 oversold optoelectronics stocks to buy now.

Transmitting information electronically is becoming increasingly difficult. It’s power intensive.

Rising speeds make copper impractical.

Photonics and optoelectronics help solve this bottleneck through light.

Computers speak electrons. Fiber speaks photons.

Connect the two…that’s optoelectronics.

Lasers provide the light. Modulators encode digital information onto that light.

It’s fascinating technology that will only see increased demand from data centers for years to come.

And the recent pullback in the group has created attractive entry points.

Today, we’ll unpack 2 oversold opportunities with compelling valuations.

Both have been institutional favorites in 2026…we see that theme expanding in 2027 as well.

2 Oversold Optoelectronics Stocks to Buy Now

Last month, photonics stocks crashed. Earnings spooked investors and traders acted fast.

That was a buy the dip opportunity then.

Today is similar.

Our Photonics Outlier Frontier basket has gained 220% the last year. Anytime this group goes on sale, get excited.

Our first oversold optoelectronics stock to own is Ciena (CIEN). The $50 billion market cap player makes the high-speed optical network equipment that moves large amounts of data across data centers.

Think of them as builders of the optical highways for the AI era:

The stock has fallen 49% from highs with a recent price of $321 per share. That’s dropped the forward PE to just 29 times:

Much of this lousy price action came after their Q3 earnings report. The company beat on the top and bottom line…however Q4 guidance didn’t shatter expectations.

This is where valuations come into play.

Analysts hiked EPS targets for FY 2026 – 2028.

In 2027, EPS is now estimated to reach $11.70 and soar to $16.77 in 2028:

Don’t fight the trend of earnings.

Also, never fight the trend of money flows.

Using our moneyflows lens, CIEN shares have been bought aggressively the past year…and only recently have shares come under pressure.

The recent red lines up with the Situational Awareness liquidation and September seasonal weakness. This is a high-quality company on sale:

Once markets get back into bull mode, expect institutional investors to bet on AI stocks with compelling valuations.

Ciena fits the bill.

Let’s do another.

Our number 2 optoelectronics stock to own in 2027 is Applied Optoelectronics (AAOI). The $9 billion market cap player builds the transceivers and optical components inside massive AI networks.

This is a riskier play as it’s super small. But the upside potential could be the greatest.

The stock is quite a bit more volatile as evidenced by the 53% fall from highs and 20% pullback in the last month.

Note the forward PE now sits at 26:

The valuation is compelling.

When you look out further, estimated sales and net income growth are staggering.

FY 2027 pegs revenues at $2.96 billion with net income of $577 million.

Go out to 2028 and sales balloon to $5.1 billion and net income doubles to $1.2 billion.

When you price shares vs their 2Y forward earnings, the PE drops to 9.9:

Like Ciena, money poured into AAOI the last year. Only recently has the photonics theme gotten hit.

AAOI shares have seen recent outflows which I believe will be short-lived.

All stocks get sold from time to time…but it’s the fundamentally sound companies that eventually attract institutional support.

The September doldrums won’t last forever. That’s why it’s important to buy the best stocks getting unfairly sold.

Our latest enhancement, Frontiers, allows you to ride along the biggest AI themes out there including photonics, space, memory & storage, and more.

Our PRO Annual subscription gets you full access to our Frontiers baskets and access to our daily flows in our cutting-edge portal.

Also included is our weekly Outlier 20 report and monthly Frontiers 20 report.

Make the most of the September selloff!

AND don’t miss my deep-dive chat with Jason Bodner unpacking our top 3 optoelectronics stocks to own. It’s a great discussion!