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Editor's note: a previous version of this article used an incorrect number for HiMax's valuation multiple. The company currently trades at approximately 23 times expected 2016 earnings. We apologize for any confusion.

What happened

Last month, shares of HiMax Technologies (HIMX -1.60%) popped 18% in August, according to data provided by S&P Global Market Intelligence. Investors were pleased with the company's second-quarter revenue increase of 18.8% year-over-year and future prospects for new technologies like augmented reality (AR).

So what

HiMax relies on its small and medium-sized driver ICs (integrated circuits) for smartphones and tablets to bring in most of its revenue (currently about 45%), and in the second quarter, the company delivered. Small and medium IC revenue grew by a modest but steady 9.4% year-over-year to $90.6 million. 

CEO Jordan Wu attributed most of the strong sequential growth in the driver segment to its customers in China:

The sequential growth was due mostly to strong sales in small and medium-sized driver IC, mainly increased order flow from our Chinese smartphone customer base and their demand for higher resolution display drivers.

But investors were likely also happy with the company's revenue growth in its other segments as well. Large-panel display driver revenue increased 24.4%, and non-driver revenue grew 21.4% year-over-year. 

Now what

The increase in revenue was clearly good news for the company, but investors are also optimistic about its future prospects in burgeoning technologies like augmented reality. 

Wu mentioned on the earnings call that the Pokemon Go game has thrust AR into the limelight and that HiMax is poised to benefit. The company already has about 30 AR customers and has been working on AR-related technology for 15 years. Wu noted that HiMax is the "provider of choice" for AR microdisplays and optics, and that optimism likely helped pushed HiMax's stock price up last month. 

Despite the bullish run in August and approximately 25% gain year-to-date (as of this writing), the stock trades at just 23 times expected 2016 earnings -- below the tech sector average of 25. But going forward, investors should keep in mind the company has experienced a number of stock run-ups and drop-offs over the past few years, so long-term investors should weigh the stock's volatility before jumping in.