Applied Optoelectronics shares jumped 7.6% in morning trading to $175.20 as the optical communications industry staged a notable rebound following a severe decline the previous day. The prior session’s selloff was sparked by a research piece from SemiAnalysis that argued rollout schedules for both 800VDC power architecture and co-packaged optics could slip, a view that rattled investors across fiber-optic vendors and data-center networking suppliers.
Investor confidence in AAOI received a boost after Raymond James analyst Simon Leopold reiterated an Outperform rating and kept a $160 price target following investor meetings with Chief Financial Officer Stefan Murry. Leopold emphasized that Applied Optoelectronics’ annualized earnings capacity at near-full production could be in the low double-digits, a level described as materially higher than current consensus estimates. The analyst also noted management’s plan to expand monthly production capacity to beyond $450 million by mid-2027.
Market sentiment was further aided when a senior vice president of networking at Nvidia publicly countered the view that co-packaged optics shipments would be delayed, saying no delays in CPO shipments are expected. That direct rebuttal to the bearish narrative provided an additional lift to sentiment across the sector.
The rebound was not limited to Applied Optoelectronics. Peers including Lumentum and Coherent also recovered in today’s trading, indicating the move reflects a broader sector bounce rather than a single-company development. Within the session AAOI shares reached an intraday high of $184.91, underscoring the scale of the rebound.
These sector dynamics occurred against a modestly weaker broader market. The S&P 500 traded about 0.4% lower, the Dow Jones was off roughly 0.8%, and the Nasdaq fell near 0.4%, making AAOI’s outperformance more notable given the soft macro backdrop.
Several factors combined to create the conditions for the sharp recovery in Applied Optoelectronics: the sector’s technically oversold position after Tuesday’s steep drop, a credible analyst reaffirmation of the company’s capacity ramp and earnings power, and a high-profile industry executive’s dismissal of the most bearish timing scenario for co-packaged optics. Together, those elements helped reverse some of the rout that followed the research note and supported a broader sector rebound into the morning session.