Applied Optoelectronics (AAOI) surged 5.05% in pre-market trading on Wednesday, recovering from a roughly 5% decline in the prior session that was triggered by B. Riley cutting its target price from $129 to $109. The stock traded at approximately $140.89, with turnover reaching $10.15 million.

The rebound is underpinned by the company's robust second-quarter fundamentals. Applied Optoelectronics reported revenue of $191.9 million, up 86% year-over-year, with its data center business revenue surging approximately 140% to surpass $100 million for the first time. Revenue from 800G products grew more than tenfold compared to the same period last year. Management indicated that customer demand currently exceeds supply capacity by 20% to 40%, and this supply-demand gap is expected to persist through mid-2027.

The broader optical communications sector provided additional tailwinds, with Lumentum rising 9.07% and Nokia up 6.78%, creating sector-wide momentum that bolstered individual stock performance. The company also expects to begin shipments of advanced 1.6 terabit transceivers at the end of the third quarter, further strengthening its medium-term demand outlook.