Applied Optoelectronics (AAOI) stock soared 5.79% in pre-market trading on Monday, marking a significant upward movement for the optical networking equipment manufacturer.

The rally in AAOI shares was part of a broader surge in optical communication stocks following news that the U.S. and Iran reached a peace deal and agreed to reopen the Strait of Hormuz. This geopolitical development triggered positive sentiment across technology sectors, with optical communication companies particularly benefiting from the improved market outlook.

The current pre-market move also appears to represent a technical rebound as selling pressure subsided. The stock had corrected recently due to concerns about delays in co-packaged optics (CPO) mass production and disclosure of planned insider share sales, and the sector is now stabilizing following that prior volatility.