Carillon Tower Advisers, an investment management company, released its first-quarter 2026 investor letter for the "Carillon Eagle Small Cap Growth Fund". A copy of the letter can be downloaded here. Small-cap stocks delivered mixed results in the quarter as the market favored value stocks over growth. The Russell 2000 Growth Index fell 2.82% in the quarter, while the Russell 2000® Value Index increased 4.96%. The first quarter saw equity market volatility due to Iran strikes, boosting energy prices. The firm is optimistic that the turbulence in the market will be short-lived, with improved valuations and potential positive developments from de-escalation in the Middle East. In addition, please check the Fund's top five holdings to know its best picks in 2026.

In its first-quarter 2026 investor letter, Carillon Eagle Small Cap Growth Fund highlighted Applied Optoelectronics, Inc. (NASDAQ:AAOI). Headquartered in Sugar Land, Texas, Applied Optoelectronics, Inc. (NASDAQ:AAOI) is a leading provider of fiber-optic networking products serving data centres, cable television, telecom equipment manufacturers, fiber-to-the-home, and internet service providers. On June 24, 2026, Applied Optoelectronics, Inc. (NASDAQ:AAOI) closed at $146.97 per share. One-month return of Applied Optoelectronics, Inc. (NASDAQ:AAOI) was -13.05%, and its shares gained 429.24% over the past 52 weeks. Applied Optoelectronics, Inc. (NASDAQ:AAOI) has a market capitalization of $11.79 billion.

Carillon Eagle Small Cap Growth Fund stated the following regarding Applied Optoelectronics, Inc. (NASDAQ:AAOI) in its Q1 2026 investor letter:

"Applied Optoelectronics, Inc. (NASDAQ:AAOI) supplies fiber-optic networking products used in high-speed cable networks and increasingly used in artificial intelligence (AI) data centers. The company reported a healthy quarter and discussed winning major new orders from large hyperscale customers. The company also has made progress on a new US-based facility that is expected to increase its capacity to serve other hyperscale customers next year."

Applied Optoelectronics, Inc. (NASDAQ:AAOI) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 55 hedge fund portfolios held Applied Optoelectronics, Inc. (NASDAQ:AAOI) at the end of the first quarter, up from 36 in the previous quarter. While we acknowledge the potential of Applied Optoelectronics, Inc. (NASDAQ:AAOI) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.