What happened

Shares of fiber-optic network products provider Applied Optoelectronics (NASDAQ:AAOI) jumped on Thursday after the company released preliminary first-quarter results that exceeded its previous guidance. The company expects revenue, gross margin, and net income to be higher than expected, driven by strong demand for its data center products. At 11:30 a.m. EDT, Applied Optoelectronics stock was up about 12%.

So what

Applied Optoelectronics will report its full first-quarter results on May 4. It now expects revenue of $96.2 million, up from its previous guidance range of $87 million to $91 million. CEO Dr. Thompson Lin pointed to robust demand for the company's data center products, as well as solid execution, for the exceptional results.

Cables going into a server in a data center.

Image source: Getty Images.

GAAP and non-GAAP gross margins are now expected in the range of 42.5% to 42.9%, up from a previous guidance range of 38% to 42%. Combined with the higher revenue, this will produce non-GAAP net income between $19.7 million and $20.2 million. That compares to a guidance range of $15.5 million to $17.2 million.

Applied Optoelectronics expects non-GAAP EPS in the range of $1.00 to $1.02, above its guidance of $0.80 and $0.82. The company reported a non-GAAP net loss of $0.04 during the first quarter of 2016.

Now what

Applied Optoelectronics' profits have soared in the past two quarters on strong revenue growth, and the first quarter will continue that trend. Despite slumping since late March, the stock is up nearly 200% over the past year, driven by these strong results.

AAOI Chart

AAOI data by YCharts.

While investors have been pushing down Applied Optoelectronics stock in recent days on no apparent news, solid first-quarter results were enough to undo some of that decline.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.