On July 23, Applied Optoelectronics rose 5.68% in regular trading, trading at $116.95/share, with turnover of $148 million. The optical communication sector rallied broadly, with Lumentum up 6.18% and Arista Networks up 1.58%.

On the news front, Alphabet disclosed during its earnings call that it plans to expand its use of third-party compute capacity in Q3. The company's cloud business backlog surged to $514 billion, up significantly from approximately $460 billion in the prior quarter, driven primarily by strong demand for AI infrastructure and AI solutions. The announcement reinforced expectations for continued buildout of data center optical interconnect capacity, directly benefiting upstream optical component suppliers.

Applied Optoelectronics is an industry-leading fiber-optic networking product supplier, serving cable television, fiber-to-the-home, and data center end markets. The stock had previously experienced a sharp correction exceeding 30% from July 13 to 17, followed by a technical rebound since July 20, with the latest catalyst providing additional upside momentum.

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