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Tech Stocks Plunge: VRT, AAOI, INOD Fall Despite Growth
6 Sep
Summary
- Vertiv, Applied Optoelectronics, and Innodata experienced pullbacks below 2026 highs.
- Strong Q2 operating growth was reported by all three companies.
- Hedge fund interest varied, with Vertiv and Innodata seeing increases.
Vertiv Holdings Co. (NYSE:VRT), Applied Optoelectronics, Inc. (NASDAQ:AAOI), and Innodata Inc. (NASDAQ:INOD) have seen their stock prices fall below 2026 highs, despite reporting robust operational growth. Vertiv's second quarter demonstrated strong performance with a 24% sales increase to $3.27 billion and an adjusted operating margin of 22.6%, fueled by the potential for increased power and cooling demand per AI rack.
Applied Optoelectronics achieved record revenue of $191.9 million, with 800G volumes doubling, and anticipates demand to outstrip production capacity until mid-2027. Innodata reported a 58% revenue surge to $92.1 million and a 92% rise in adjusted EBITDA to $25.4 million, leveraging its data engineering and model evaluation services.
Hedge fund activity showed mixed trends. Vertiv Holdings Co. (NYSE:VRT) saw an increase in holdings from 96 to 112 funds in Q2. Similarly, Innodata Inc. (NASDAQ:INOD) grew from 20 to 25 funds. Applied Optoelectronics, Inc. (NASDAQ:AAOI) experienced a slight decrease in hedge fund interest.
Despite the pullbacks, significant risks remain. Vertiv faces challenges with project timing and supply chain issues, while Applied Optoelectronics contends with customer concentration and execution risks in its manufacturing ramp. Innodata's reliance on large customers and evolving model-training methods present potential vulnerabilities. Investors are cautioned against valuing these companies solely based on their distance from past highs, instead focusing on order conversion, gross-margin durability, and customer diversification.
