Applied Optoelectronics (AAOI) experienced a significant pre-market surge of 5.43% on Tuesday, reflecting strong investor interest in the optical networking component maker.

The movement follows bullish commentary from prominent investor Serenity, who publicly stated that AAOI is their most favored US photonics stock and suggested it could be "the next SanDisk." Serenity highlighted that photonics companies are approaching a revenue acceleration inflection point, expected around the first half of next year, with the industry currently in a capacity building phase.

Fundamentally, the company's recent progress is contributing to the positive sentiment. Applied Optoelectronics' Xinbei factory 800G optical module capacity has reportedly received production approval from a hyperscale customer. This development comes amid surging AI data center demand for high-speed optical interconnect solutions, positioning the company to potentially benefit from this growing market segment.