Applied Optoelectronics (AAOI) stock surged 9.22% during intraday trading on Monday, marking a significant upward movement for the optical networking equipment manufacturer.

The rally was supported by positive geopolitical developments, as news of a U.S.-Iran peace deal and the reopening of the Strait of Hormuz triggered improved market sentiment across technology sectors. Optical communication companies particularly benefited from the reduced geopolitical tensions and their potential positive impact on global trade and technology infrastructure investments.

Additionally, the surge reflects a technical rebound and easing concerns over the co-packaged optics (CPO) technology roadmap. Following previous corrections due to bearish analyst reports questioning CPO mass production timelines, market panic was alleviated after NVIDIA executives confirmed that their CPO switches are already deployed in data centers and that related products will commence mass production delivery as planned in the second half of the year.